2012 (7) TMI 50 - AT - Service Tax

Waiver of pre-deposit whether appellant liable to pay service tax under tour operators service - applicants were engaged in the business of travels and providing its buses on hire on contractual basis to various customers for an agreed commercial consideration Held that - In the case of Sharma Transports (2010 (10) TMI 417 (Tri)) unconditional waiver of pre-deposit has been granted to the applicants relying on the letters dated 4.11.2009 and 29.3.2010 issued by the Finance Ministry relating to transport of passengers on point to point basis - issue is stated to be kept in abeyance till such time the matter is examined and suitable clarification issued by the Board waiver of pre-deposit granted.

Summary

Issues:
Service tax demand on tour operators' service for the period 1st October, 2001 to 30th September, 2006. Whether providing buses on hire on a contractual basis for transporting employees constitutes 'tour operators' service attracting service tax.

Analysis:
The Appellate Tribunal considered the service tax demand against the applicants for providing buses on hire for transporting employees from designated spots to the company and back on a contractual basis. The issue revolved around whether this activity falls under the category of 'tour operators' service attracting service tax. The applicants argued that the buses did not meet the specifications under Rule 128 of the Central Motor Vehicle Rules, 1989, and therefore, they should not be liable to pay service tax as 'tour operators'. They relied on various precedents where similar activities were not considered as 'tour operator' services. The Tribunal noted the contradictory views on the issue by different authorities and granted unconditional waiver of pre-deposit based on the absence of a definite finding on the matter. The demand of service tax, interest, and penalties were stayed during the pendency of the appeals.

The learned Advocate for the applicants cited cases like CCE, Meerut vs. Highway Motors, CCE, Bhavnagar vs. Gujarat Travels, and others to support the argument that providing buses on hire for transportation did not amount to 'tour operators' service. They highlighted instances where similar activities were not considered as falling under the category of 'tour operators' service. The Advocate also referred to a case where the Commissioner of Central Excise held that providing buses on hire for commercial consideration did not constitute 'tour operator' service. Additionally, reliance was placed on orders-in-appeal in various cases where the service tax demand was either dropped or stayed. The Advocate requested unconditional waiver of pre-deposit during the appeal process.

The Revenue, represented by the learned SDR, opposed the contentions of the applicants, arguing that previous decisions relied upon by the applicants were not applicable in this case. They pointed out that the matter was pending before higher courts for determination of whether the activities in question constituted 'tour operators' service attracting service tax. The Revenue highlighted a case where pre-deposit of service tax was directed in similar circumstances. They emphasized the need for the applicants to make a pre-deposit of the service tax demand.

After hearing both sides and considering their submissions, the Tribunal noted the reliance on decisions by various High Courts and Tribunals, as well as the contradictory views on the issue. They referred to a case where unconditional waiver of pre-deposit was granted due to the absence of a definite finding on the matter. Relying on this precedent, the Tribunal granted unconditional waiver of pre-deposit for the service tax demand, interest, and penalties during the pendency of the appeals. The stay applications were disposed of accordingly.