2012 (7) TMI 707 - AT - Service Tax

Tour Operator s Service - demand, interest u/s 75 and penalties u/s 76, 77 and 78 - non service tax registration not obtained - invoking the extended period of limitation - assessee contention that they are engaged in mere transportation of passengers from one place to another in a vehicle under a permit granted by the competent authority and an alternative relief as claim of exemption under Notification No.20/2009-ST dt. 07/07/2009 - Held that - Considering the definitions of tour and tour operator under Section 65 it would become abundantly clear that the activities of the assessees who are before us fell within the definition of tour and accordingly the assessees fell within the ambit of tour operator defined from time to time - the passengers were touring in the buses of the assessees. These buses were tourist vehicles within the meaning of this term defined under Section 65 of the Finance Act, 1994 read with Section 2(43) of the Motor Vehicles Act, 1988 - as the assessee were running the buses on predetermined routes in scheduled hours under such permit can be held to have undertaken the business of planning, scheduling, organizing or arranging tours squarely covered by the main part of the definition of tour operator under Section 65(115). Claim of benefit of Notification No.20/2009-ST dt. 07/07/2009 read with corrigendum dt. 31/08/2009 merits consideration - the said Notification granted full exemption from payment of service tax on the taxable service referred to in Section 65(105)(n) of the Finance Act, 1994, provided by a tour operator having contract carriage permit or tourist vehicle permit for inter-State or intra-State transportation of passengers, excluding tourism, conducted tours, charter or hire services Remand the case back to pass speaking orders after upholding the taxability of the assessee s activities under Section 65(105)(n) to consider the claim for exemption under Notification No.20/2009-ST and re quantify the taxable value considering plea that income from stage carriage was also included in the taxable value, excluding luggage and parcel charges from the taxable value and cum-tax value - in favour of assessee by way of remand.

Issues Involved:
1. Taxability of the activity under "Tour Operator's Service."
2. Definition and scope of "Tour Operator."
3. Plea for exemption under Notification No. 20/2009-ST.
4. Invocation of the extended period of limitation.
5. Valuation grievances.

Detailed Analysis:

1. Taxability of the Activity under "Tour Operator's Service":
The core issue in all appeals was the demand for service tax under "Tour Operator's Service" as defined in Section 65(105)(n) of the Finance Act, 1994. The appellants contested that they were not operating tours but merely transporting passengers on a point-to-point basis. The Tribunal noted that the term "tour" always meant a journey from one place to another, and "tour operator" included those operating tours in tourist vehicles with permits under the Motor Vehicles Act, 1988. Therefore, the Tribunal upheld the taxability of the appellants' activities under the specified section.

2. Definition and Scope of "Tour Operator":
The definition of "Tour Operator" evolved over time:
- Initially, it meant a person holding a tourist permit under the Motor Vehicles Act, 1988.
- From 10/09/2004, it included those engaged in planning, scheduling, organizing, or arranging tours by any mode of transport.
- From 16/05/2008, it further included contract carriages covered by permits, excluding stage carriage permits.
The Tribunal concluded that the appellants' activities fell within these definitions, as they were transporting passengers in tourist vehicles under the relevant permits, thus fitting the description of "tour operators."

3. Plea for Exemption under Notification No. 20/2009-ST:
The appellants sought exemption under Notification No. 20/2009-ST, which granted full exemption from service tax for tour operators with contract carriage or tourist vehicle permits for intra-State or inter-State transportation of passengers, excluding tourism, conducted tours, charter, or hire services. This exemption was given retrospective effect from 01/04/2000 by Section 75 of the Finance Act, 2011. The Tribunal directed the adjudicating authorities to examine the appellants' claims for exemption on merits.

4. Invocation of the Extended Period of Limitation:
The Department invoked the extended period of limitation on the grounds of suppression of facts with intent to evade tax. The appellants argued that there was uncertainty regarding the taxability, as evidenced by various notifications and clarifications. The Tribunal acknowledged this argument and directed the adjudicating authorities to reconsider the plea of limitation in light of the legislative and administrative context.

5. Valuation Grievances:
Several appellants raised issues regarding the inclusion of income from stage carriages, luggage, and parcel charges in the taxable value. In some cases, the plea for excluding these amounts was not properly considered or rejected due to lack of evidence. The Tribunal directed the adjudicating authorities to address these valuation grievances and requantify the taxable value accordingly.

Conclusion:
The Tribunal upheld the taxability of the appellants' activities under Section 65(105)(n) of the Finance Act, 1994, but set aside the demands with directions to:
1. Consider the appellants' claims for exemption under Notification No. 20/2009-ST.
2. Requantify the taxable value after addressing the appellants' grievances.
3. Reconsider the plea of limitation.
4. Reexamine the appellants' penal liability.
5. Pass speaking orders after giving the appellants reasonable opportunities to be heard.

All appeals and stay applications were disposed of in these terms.

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