Page 173 - GSTL_26th March 2020_Vol 34_Part 4

2020 ] IN RE : YKK INDIA PVT. LTD. 683
words, any person who provides motor vehicle designed to carry ‘passengers’,
on rent, would be included. This also implies that it includes renting of motor
cars, motor cabs, maxi cabs, minibuses, buses and all other motor vehicles which
are designed to carry passengers, irrespective of their capacity to carry passen-
gers. The contentions of the applicant that hiring of buses which can carry large
number of passengers would not qualify under “rent-a-cab” is found to be un-
tenable and the activity of the contractor in the instant case, providing buses or
cars on hire to the applicant, is specifically covered under the meaning of “rent-a-
cab” which makes the impugned supply as ineligible for ITC in terms of Section
17(5) of the CGST/HGST Act, 2017. Further, we find that the appellant had not
challenged that the cars and buses hired by them do not fall under the definition
of cab.
15. Now we take up the second issue whether renting of vehicle is dif-
ferent from hiring. In this regard appellant has contended that hiring of Buses
and Cars for transportation of employees is not in the nature of rental service. In
terms of the Motor Vehicle Act, 1988 (“MV Act”) read with the Rent-a-Cab
Scheme, 1989, the activity of ‘hiring is different than one of renting’. Appellant
further contended that ‘Hiring’ of Motor Vehicles is different than ‘renting’ in-
asmuch as renting involves giving possession and control of the ‘motor cab’ over
to the renter who is desiring to drive the motor cab himself or gets the driver to
drive the motor-cab for his own use. Whereas in case of ‘hire a car’, the contrac-
tor retains the control and possession of the motor-cab, and is responsible to pro-
vide transportation services for consideration which is dependent on the usage
i.e. number of kilometres travelled and/or the number of hours the motor-cab is
used. In this regard appellant relied upon the judgment of Uttarakhand High
Court in the case of Commissioner of Customs & Central Excise v. Sachin Malhotra,
reported as 2015 (37) S.T.R. 684 (Uttarakhand).
15.1 We find that service tax was first introduced in the budget of 1994
w.e.f. 1-7-1994. Initially, only few services were proposed to be taxed and later
the net was widened. The services provided by any person under a rent-a-cab
scheme operator was also included in the definition of taxable services but was
exempted up to 31-3-2000. The exemption was later withdrawn and such service
was covered within the charging Section 66 of the Finance Act.
The relevant provisions of the Finance Act are reproduced herein
below :-
“Definitions.
65. In this Chapter, unless the context otherwise requires. -
…………….
…………….
(105) “taxable service” means any service provided or to be provided;
…………….
…………….
(o) to any person, by a rent-a-cab scheme operator in relation to the rent-
ing of a cab;”
Section 66 of the Act is the charging Section and it at the relevant time
provided that there shall be levied tax referred to as service tax at a particu-
lar rate of taxable service referred to inter alia in sub-clause (o) of Clause
(105) of Section 65 and collected in such manner as may be prescribed.
GST LAW TIMES  26th March 2020  269