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As hiring and renting can be distinguished from each other, service tax cannot be levied on hiring of cabs under category of rent-a-cab service.
Facts
The Appellant entered into a contract for supply of vehicles on hiring basis & did not pay service tax based on a view that hiring of vehicles is not liable for service tax under category of ‘Rent a cab Service’.
Held
The Tribunal relied upon recent judgment of the Hon’ble High Court of Uttrakhand in the case of CC&CE vs. Sachin Malhotra 2014-TIOL-2039-HC-UKAND-ST [digest reproduced in the January 2015 issue of BCAJ]. In that case, the High Court noted that, even though the word “hire” is used in rent-a-cab scheme, both are different transactions. In case of hiring, control of vehicle is retained by owner irrespective of the fact whether he himself drives vehicle or engages a driver and customer merely pays charges for travelling in such vehicle. But in case of “rent-a-cab” service, rent is paid as per terms of contract and vehicle is used by the person as his own & he is free to take it anywhere as per his choice, but subject to terms & conditions of contract. The Hon’ble High Court held that unless control of vehicle is passed on to hirer under rent-a-cab scheme, there does not arise any service tax liability as envisaged by provisions of section 65(91) of the Finance Act, 1994. In the light of this judgment, the matter was decided in favour of assessee.
