2010 (6) TMI 542 - AT - Service Tax

Demand - Rent a cab operator services - Business auxiliary services - demand of service tax on the tour operator services up to 10-9-2004 does not arise as the department was aware of the appellants activity and the show cause notice dated 16-12-2007 can at the most demand duty for a period within a year from the date of issuance of show cause notice - there are no findings whether the vehicles which were plied by the appellants during the period October 2000 to 10-9-2004 conformed to the specifications of the definition of tour operator services - It is correct that there existed a doubt and ambiguity regarding the scope of levy on tour operator services - whether the vehicles which were plied by the appellants during the period October 2000 to 10-9-2004 conformed to the specifications of the definition of tour operator services the contentions raised by the learned counsel as to the amount paid by them to the various departments has to be reworked out which needs to be appreciated by the adjudicating authority on the evidences which were filed by the assessee before us for the first time - The appeal is partly allowed by way of remand

Summary

Issues:
1. Alleged non-payment of service tax on tour operators, rent a cab services, and business auxiliary services.
2. Contestation of show cause notice on merits and limitation.
3. Interpretation of the provisions of Section 65(115) regarding tour operator services.
4. Applicability of service tax on tour operator services prior to 10-9-2004.
5. Time-barred demand and imposition of penalties under Sections 76, 77, and 78.

Analysis:
1. The appeal challenged an order alleging non-payment of service tax on tour operators, rent a cab services, and business auxiliary services. The lower authorities found the appellant liable for contravening Sections 68, 69, and 70 of the Finance Act, 1994, specifically regarding tour operator services. The appellant contested the show cause notice on various grounds, including limitation.

2. The appellant argued that the tour operator services in question were not taxable as they involved activities like Bharat Darshan and Safari Scheme, which were conducted through railways and forest departments, respectively. The appellant contended that the demand for service tax prior to 10-9-2004 was time-barred, citing confusion and lack of willful evasion due to being a State Govt. body.

3. The definition of tour operator services was crucial for determining tax liability. The provisions of Section 65(115) were analyzed for the period up to 10-9-2004, and subsequent changes were noted. The Tribunal considered whether the appellant's activities fell within the scope of tour operator services during the relevant periods.

4. The Tribunal acknowledged the existence of doubt regarding the applicability of service tax on the appellant's activities, especially as a State Govt. Undertaking. Previous decisions were cited to support the argument that penalties under Section 78 were unwarranted due to the lack of willful evasion.

5. The judgment partially allowed the appeal, setting aside the demand of service tax prior to 10-9-2004 as time-barred. The matter was remanded to the adjudicating authority for reconsideration of the tax liability from 10-9-2004 onwards. Penalties under Sections 76, 77, and 78 were also reviewed, with Section 78 penalty being set aside, and the matter was referred back for further consideration.

In conclusion, the judgment addressed issues related to service tax liability on tour operator services, interpretation of relevant provisions, applicability of tax for specific activities, time limitations, and imposition of penalties, providing a detailed analysis and decision on each aspect of the case.