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Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
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PJ/Case Law/2014-15/2153

Penalty not imposable when there was ambiguity regarding service tax liability under rent-a-cab when payment is made on the basis of distance as per rate sheet.

Case:- COMMISSIONER OF CENTRAL EXCISE, KANPUR Vs M/s OMKAR SINGH SOLANKI
 
Citation:- 2014-TIOL-353-CESTAT-DEL
 
Brief facts:- The respondent during 2002-2003, in terms of an agreement with BSNL, provided vehicles to them for transportation of their employees, etc., on payment of minimum charges of Rs.13,200/- for upto 1,000 KM per month and thereafter, Rs.3.15 per KM, with extra charges for night duty. The department came to know about this activity of the respondent sometime in 2007 and being of the view that this activity of the respondent was covered by the taxable service of rent-a-cab, issued a show cause notice dated 29.08.2007 for demand of service tax of Rs.90,982 /- along with interest and also for imposition of penalty under Section 75A, 76, 77 and 78 of the Finance Act, 1994. The show cause notice was adjudicated by the Asstt. Commissioner vide order-in original dated 7.6.2008 by which the above mentioned service tax demand was confirmed along with interest and besides this, penalties were imposed under Section 75A, 76, 77 and 78 of the Finance Act, 1994. On appeal being filed to the Commissioner (Appeals), the Commissioner (Appeals) while upholding the service tax demand along with interest, waived penalties under Section 76, 77, 78 by invoking Section 80 of the Finance Act, 1994 observing that since the respondent's agreement with BSNL was silent on the issue of payment of service tax and since the BSNL did not pay service tax to the respondent, as such, this was not a case of collecting service tax by the respondent from the BSNL and not paying to the Government, he was convinced that the respondent were not clear about the levy of the service tax on their activity and hence, it was a fit case for 'invoking Section 80 ibid. Against the portion of the order of the Commissioner (Appeals) waiving the penalty on the respondent under Section 76, 77, 78, the Revenue had filed this appeal.
 
Appellant’s contentions:- Heard Ms. Ranjana Jha, ld. Joint CDR, who assailed the impugned order insofar as it had waived the penalty on the respondent under Section 76, 77 and 78 and pleaded that service tax on rent-a- cab service was leviable since July, 1997. He held that the respondent could not plead the ignorance of the law. According to him not taking service tax registration and not paying the service tax showed the intention of the respondent to evade the tax and that the Commissioner (Appeals) finding invoking section 80 of the Finance Act for waiving the penalty was not correct in the circumstance of the case.
Respondent’s contentions:- None appeared for the respondent. It was seen that notice issued to them had been returned undelivered. In view of this insofar as the respondent were concerned, the matter was being decided ex parte in terms of Rule 21 of CESTAT (Procedure) Rules, 1982.
 
Reasoning of judgment:- We have considered the submissions of the ld. DR and perused the records. Though the service tax on rent-a-cab had been introduced since 16.07.1997 and the period of dispute in this case was 2002-2003, it was seen that the contract of the BSNL with the respondent was silent about service tax and as such, it was not in dispute that BSNL were not paying service tax to the respondent along with the vehicle hire charges. Moreover, during the period of dispute, there was confusion on the point as to whether service tax under the Heading Rent-a-Cab Scheme Operator's Service under Section 65(105)(o) read with Section 65(91) and 65(20) & 65 (71) would be attracted when vehicles were supplied along with drivers and the charges were on the basis of distance travelled by the vehicle, as the Tribunal in the case of Kuldeep Singh Gill reported in 2005 (186) ELT 373 (Tribunal-Delhi) had held that in such a case, when the vehicle supplier was paid on the basis of distance as per rate sheet, service tax under rent-a-cab operator's service would not be attracted. When there was lack of clarity about the scope of the rent-a-cab operator's service covered by Section 65(105)(o) and the respondent in this case was an individual who in terms of his contract with BSNL was supplying vehicles and charging for the same on kilometer basis and when the respondent's contract with BSNL did not mention any service tax, and this was not case a case where the Appellant as service provider while collecting the service tax from the BSNL did not pay the same to the Government, it cannot be said that the respondent was aware of the service tax liability and had deliberately evaded the payment of tax. Therefore, we do not find any infirmity in the impugned order waiving the penalty on the respondent under Section 80 of the Finance Act, 1994. The Revenue's appeal was dismissed.
 
Decision:- Appeal was dismissed.
 
Comment:- The analogy drawn from the case is that since there lied an ambiguity in the fact that service tax under rent-a-cab operator's service would be attracted or not when the vehicle was hired along with driver and payment was made on the basis of distance per rate sheet, penalty cannot be imposed for non payment of service tax. It was not the case where service tax was collected but not paid. Hence, penalties were set aside by invoking the provisions of section 80 of the Finance Act, 1994.
 

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