Whether the pick up and drop facility of employees by bus is liable to service tax?

PJ/Case Laws/2012-13/1237

Case:- M/S PEARL TRAVELS VS COMMISSIONER OF CENTRAL EXCISE, DAMAN

Citation: - 2012-TIOL-1195-CESTAT-AHM

Brief fact: - The Stay application is filed for the waiver of pre-deposit of Service tax of Rs 16,84,057/- and penalties under various section of Finance Act,1994 which was confirmed by the lower authorities on the ground that the appellant herein is providing Rent-a-Cab Service and Business Support Service to Welspun India Ltd.

Appellant Contention: The Appellant submitted that various decisions of the Tribunal have already taken a view that transportation of employees based upon per kilometer running of the vehicles, which is in control of the appellant, would not be liable for tax under Rent-a-Cab service. It is also his submission that out of the demand for Rent-a-Cab service, they have already deposited approximately an amount of Rs. 1.44 Lakhs. As regards the service tax liability under Business Support Service, he further submitted that as per the agreement/contract entered into with M/s. Welspun India Limited, the appellant is required to maintain the buses, fill the fuel, pay the RTO Taxes and in turn the appellant is reimbursed the amount at the rate of Rs. 16.12 per kilometer for big buses and Rs. 10.94 per kilometer for small buses. As the appellant is managing the buses which are procured by M/s. Welspun India Limited and given to them for running the same for transportation of the employees, therefore it would fall under the category of support service of business and commerce. He further analyzed the definition of Business Support Services and submits that the revenue is trying to put these services under the Category of Infrastructural Support Service, which is not mentioned in the said definition.

Respondent Contention:- The Learned departmental representative reiterate the finding of the lower authorities.

Reasoning of Judgment: The Tribunal held that the definition of Support Services of Business and Commerce indicates that it means - "services provided in relation to Business or Commerce" and also has an inclusive definition after this sentence. At this juncture, the Tribunal Contended that the transportation of the employees from their residence to factory premises or vice versa, could be in relation to the business of the said M/s. Welspun India Limited of manufacturing activity. The issue in this regard is needs to be gone into detail and in depth, which can be done only at the time of final disposal of appeal. Considering the fact that appellant has already deposited an amount of Rs. 1.44 Lakhs and the issue being debatable, Therefore Tribunal direct the appellant to further deposit an amount of Rs. 2,50,000/- (Rupees two Lakhs fifty thousand only) within eight weeks from today and report compliance on 20.09.2012. Subject to such compliance being reported, the application for waiver of pre-deposit of balance amounts involved is allowed and recovery thereof stayed till the disposal of appeal.

Decision:- Conditional Stay granted

Comments:- Although it is a stay matter only but this matter is still very disputed. Even after the introduction of negative list, whether this service will fall under service tax? The “contract carriage” and “ stage carriage” is still exempted. Whether this activity will fall under this category? The times to come will decide.

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PJ/Case Laws/2012-13/1237

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