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2016 (6) TMI 1268 - AT - Service TaxLevy of service tax - Tour operator service - It appeared to department that various chartered/contract/tour services provided by APSRTC to the public fall under the tour operator services as defined under the clause (115) of Sec.65 of the Finance Act, 1994 and that APSRTC were providing various tour operator services and evading payment of Service Tax - Held that - The departments do not have a case that the buses of the assessee used for carrying passengers as per contract to destinations conform to such specifications so as to make them fall within the definition of contract carriages. It is not disputed that the vehicles used by the assessee for the impugned services are stage carriage vehicles and are carrying out the impugned activities only on the basis of temporary permits issued by A.P. Transport Authorities. They do not at all become contract carriages as they do not conform to the definition of contract carriage in Section 2(7) of M.V. Act. The requirement of permit granted under the Motor Vehicle Act, 1988, it was imperative that the vehicle being used by the respondent to possess tourist permit and the vehicle is a tourist vehicle. Undisputedly the impugned vehicles are out of purview of the definition of tourist vehicle. The reservation of the department on this aspect is that the conclusion arrived at by the learned Commissioner (Appeals) is prima facie wrong as much as the tourist vehicle operated by the respondent will not be out of the purview of the said definition. The reservation is without any evidence and it neither challenge the veracity or the contents of the certificate. As regard the other grievance of the appellant that the learned Commissioner (Appeals) has not taken into consideration the fact that the lower adjudicating authority has himself seen the vehicle and found that the vehicles predominantly covered the specifications in Rule 128 of Motor Vehicle Rules, 1988. The impugned activities carried out by the assessee will not attract the definition of Tour operator under section Section 65 (52) of Finance Act,1994 prior to 10.09.2004 and under Section 65 (115) for the remainder period covered in this case - appeal allowed - decided in favor of assessee.
Issues Involved:
1. Applicability of Service Tax on various chartered/contract/tour services provided by APSRTC. 2. Definition and applicability of "Tour Operator" under the Finance Act, 1994. 3. Compliance with Motor Vehicles Act, 1988, regarding permits and vehicle specifications. 4. Validity of demands raised through show cause notices for different periods. Issue-Wise Detailed Analysis: 1. Applicability of Service Tax on various chartered/contract/tour services provided by APSRTC: The department contended that APSRTC's services fell under the "tour operator" category as defined under Section 65(115) of the Finance Act, 1994, and they were evading Service Tax. Show cause notices were issued for different periods, confirming the demand for Service Tax. APSRTC argued that their services did not qualify as "tour operator" services since they did not use tourist vehicles and operated under stage carriage permits. 2. Definition and applicability of "Tour Operator" under the Finance Act, 1994: The definition of "tour operator" evolved over time: - Pre-10-09-2004: "Tour operator" meant any person engaged in operating tours in a tourist vehicle covered by a permit under the Motor Vehicles Act, 1988. - Post-10-09-2004: The definition expanded to include any person engaged in planning, scheduling, organizing, or arranging tours by any mode of transport. - From 16-05-2008: Included operating tours in a tourist vehicle or a contract carriage covered by a permit other than a stage carriage permit. APSRTC argued that their vehicles did not conform to the definition of a tourist vehicle under Section 2(43) of the Motor Vehicles Act, 1988, and hence, they did not fall under the "tour operator" category. 3. Compliance with Motor Vehicles Act, 1988, regarding permits and vehicle specifications: APSRTC used stage carriage permits and temporary contract carriage permits under Section 88(8) of the Motor Vehicles Act, 1988, for their services. The tribunal noted that the vehicles used by APSRTC did not meet the specifications for tourist vehicles as per Rule 128 of the Motor Vehicle Rules. The tribunal referenced the Madras High Court's judgment in the SFBAT case, which clarified that vehicles must conform to tourist vehicle specifications to attract Service Tax under the "tour operator" category. 4. Validity of demands raised through show cause notices for different periods: The tribunal analyzed the show cause notices and the periods involved: - For the period pre-10-09-2004, the tribunal held that APSRTC's activities did not attract Service Tax under the "tour operator" category as their vehicles were not tourist vehicles. - For the period post-10-09-2004, the tribunal noted that APSRTC's activities did not fall under the expanded definition of "tour operator" as they were not engaged in planning, scheduling, organizing, or arranging tours in the manner intended by the amended definition. Conclusion: The tribunal concluded that APSRTC's activities did not attract Service Tax under the "tour operator" category for the entire disputed period. The demands raised in the show cause notices were not sustainable, and the related orders were set aside. Consequently, the department's appeal was dismissed, and APSRTC's appeals were allowed with consequential reliefs as per law. Final Order: - Appeals No. ST/284/2007, ST/366/2008, and ST/379/2009 were allowed with consequential reliefs. - Appeal No. ST/312/2007 filed by the department was dismissed.
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