Service Tax - Rent a cab- Difference Between Renting and Hiring - Kuldeep Singh case differed with
WHAT exactly do you do when you rent a cab or hire a cab? If you are connected with Service Tax, this is indeed a taxi-ngproblem. (Once a vernacular newspaper reported me as editor of Taxi India Online)
In Kuldeep Singh's case, Kuldeep Singh was providing transport services to IOCL for transport of its employees. His plea was that the vehicle was not rented to IOC and so there was no renting of cabs. The Punjab and Haryana High Court did not agree - 2010-TIOL-436-HC-P-H-ST. The High Court held that if the vehicle is used for providing transport service (as in the present case), then it will amount to providing taxable service under the Act and the respondent-firm was liable to pay service tax.
Recently, a similar issue reached the Uttarakhand High Court. This High Court did not agree with the Punjab and Haryana High Court in Kuldeep Singh's case.
The High Court held:
Difference between renting and hiring : under the rent-a-cab scheme, the hirer is endowed with the freedom to take the vehicle, wherever he wishes, and he is only obliged to keep the holder of the licence informed of his movements from time to time. When a person chooses to hire a car, which is offered on the strength of a permit issued by the Motor Vehicles Department, then the owner of the vehicle, who may or may not be the driver, will offer his service while retaining the control and possession of the vehicle with himself. The customer is merely enabled to make use of the vehicle by travelling in the vehicle. In the case of a passenger, he is expected to pay the metered charges, which is usually collected on the basis of the number of kilometers travelled. These are all matters, which are regulated by the Government. Unlike the said scenario, in the case of a rent-a-cab scheme, as is clear from the very fundamental principle underlying the scheme, it is to give the hirer the freedom to use the vehicle as he pleases, which, undoubtedly, implies that he must have possession and control over the vehicle. This is the fundamental distinction between rent-a-cab and a pure case of hiring.
Rent a cab: unless the control of the vehicle is made over to the hirer and he is given possession for howsoever short a period, which the contract contemplates, to deal with the vehicle, no doubt subject to the other terms of the contract; there would be no renting.
In Transport Solutions Group - , the Tribunal followed the Punjab and Haryana High Court judgement in Kuldeep Singh.
Now there are two contradictory judgements of two High Courts. Now what? Off to Supreme Court?
We bring you the Uttarakhand judgement today. Please see Breaking News.