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Issues involved: Appeal against impugned order demanding Service Tax for the period 1-9-1997 to 31-12-1997 as tour operator, exemption Notification No. 52/98 dated 18-7-1998, definition of Tour Operator under Section 65(105) of the Finance Act, imposition of penalties under Section 77 of the Finance Act.
The Revenue filed an appeal against the impugned order passed by the Commissioner (Appeals) demanding Service Tax for the period 1-9-1997 to 31-12-1997 as a tour operator. The respondents were directed to file necessary returns and pay the Service Tax, with penalties imposed under Section 77 of the Finance Act for not filing quarterly returns. The Commissioner (Appeals) set aside the adjudication order citing exemption under Notification No. 52/98 dated 18-7-1998, stating that the appellant did not provide services as a Tour Operator. The Revenue contended that the exemption was not retrospective, and the demand predates the notification, making the Commissioner (Appeals) findings unsustainable. The Revenue argued that the respondents, registered as Tourist Vehicles under the Motor Vehicles Act, were liable to pay Service Tax as tour operators u/s 65(105) of the Finance Act. The definition of Tour Operator includes a person holding a Tourist permit under the Central Motor Vehicles Rules. The respondents, having a tour operator permit under the Motor Vehicles Act, were deemed liable to pay Service Tax as tour operators during the period in dispute. The authorized representative submitted that the Service Tax on tour operators was introduced from 1-9-1997, and the demand was from that date. Due to a bona fide belief that they were not organizing tours, the appellant did not apply for registration or file statutory returns. The Tribunal, after reviewing the definition of Tour Operator as per the Finance Act, concluded that the respondents, holding a tourist permit under the Motor Vehicles Act, were indeed liable to pay Service Tax as tour operators during the disputed period. Regarding the imposition of penalties, the Tribunal noted that the Service Tax on tour operators was first levied from 1-9-1997, and the demand was from that date. Section 80 of the Finance Act stipulates that no penalty shall be imposed if the assessee proves a reasonable cause for the failure. As the disputed period marked the initial levy, the respondents were found not liable for any penalty u/s 80 of the Finance Act. The appeal was disposed of accordingly.
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