2006 (12) TMI 469 - AT - Central Excise

Waiver of pre-deposit - Stay application - recovery of demand of service tax - tour operators service - Penalty imposed - HELD THAT - As per the clarification issued by CBEC, the tax till then had not applied to package tours, which involved transport by road alone. The revised definition made the tax applicable as regards package tours organised also with vehicles other than tourist vehicles. A perusal of the definition and clarification does not appear to bring the activity of the appellants under the coverage of tour operator service. Transport of employees from different places to a common destination like a place of work, such as a factory in the instant case and bringing them back on a daily basis does not appear to be planned, scheduled, organised arrangement of tours using the buses of the appellants. The appellants have therefore made out a prima facie case against the demand and penalties imposed on them. Accordingly, there will be complete waiver of pre-deposit and stay of recovery of the dues and penalties affirmed in the impugned order till final disposal of the appeal.

Issues:
1. Applicability of Service Tax on tour operators' services rendered by the appellants.
2. Interpretation of the revised definition of "tour operator" effective from 10-9-2004.
3. Clarification provided by Circular No. 80/10/04 S.T. dated 17-9-2004 regarding the scope of service.
4. Whether the activity of the appellants falls within the purview of tour operator service.
5. Justification for waiver of pre-deposit and stay of recovery of demand of Service Tax and penalties imposed.

Analysis:

Issue 1:
The appellants, M/s. Tamilnadu State Transport Corporation (Kumbakonam) Ltd., Trichy, sought a waiver of pre-deposit and stay of recovery of demand of Service Tax for the tour operators' service provided between 10/2004 to 12/2005, along with penalties imposed. The original authority demanded Service Tax of Rs. 8,94,369/- and imposed penalties under Sections 77, 78, and 76 of the Finance Act 1994. The Commissioner (Appeals), Trichy, affirmed the demand and penalties in the original order.

Issue 2:
The revised definition of "tour operator" effective from 10-9-2004 expanded the scope to include any person engaged in planning, scheduling, organizing, or arranging tours by any mode of transport. The Commissioner found that the appellants' activity of deploying buses for transporting BHEL employees fell within this definition, upholding the original authority's order.

Issue 3:
The appellants argued that Circular No. 80/10/04 S.T. clarified that the levy on tour operators involved in operating tourist vehicles continued post-amendment. They contended that as they used regular public transport buses for BHEL employee transport, their activity did not come under the amended levy.

Issue 4:
The Respondent submitted that the tax demand was not solely related to BHEL staff transport but also included tours organized by the appellants for private individuals attending events like marriages. The appellants clarified that in such cases, individuals purchased separate tickets at general public tariffs for the journey.

Issue 5:
Upon hearing both sides, it was noted that the revised definition of a tour operator covered planning, scheduling, organizing, or arranging tours by any mode of transport. However, the activity of transporting employees to and from work locations like a factory daily did not seem to fall within the definition of tour operator service. The appellants established a prima facie case against the demand and penalties, leading to a complete waiver of pre-deposit and stay of recovery until the appeal's final disposal.

This analysis delves into the applicability of Service Tax on tour operators' services, the interpretation of the revised definition of "tour operator," the impact of the Circular clarifications, the assessment of the appellants' activities, and the justification for the waiver of pre-deposit and stay of recovery of dues and penalties.

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