2012 (11) TMI 251 - AT - Service Tax

Demand of Service Tax with Interest and Penalty - Held that - Supply of ordinary buses (not tourist vehicles) to other tour operators as well as commercial or non-commercial concerns on rent basis i.e. activity under BRA appellants are liable to service tax on that activity but providing their buses on rent to ITDC who is a tour operator and discharging service tax liability under the category of tour operator service tax cannot be levied - In absence of clarity, the issue being interpretative in nature Penalty imposed on the appellants are waived - in favour of appellant.

Summary

Issues:
- Appellants appealing against service tax demand under "tour operators service"
- Determining if activity of Bus Reservation Agreement (BRA) falls under tour operators service
- Interpretation of definitions of "tour," "tourist vehicle," and "tour operator"
- Dispute over service tax liability for activities pre and post 10/09/2004
- Applicability of service tax for BRA post 10/09/2004

Analysis:
1. The appellants contested a service tax demand under "tour operators service," specifically related to activities like Bus Reservation Agreement (BRA), Seat Reservation Agreement (SRA), Nashik Darshan (ND), and Tour Extension (TE).

2. The core issue revolved around whether the activity of BRA qualified as a tour operator service. The appellant argued that since they provided buses on rent mainly to ITDC and not for tours in tourist buses, the activity did not fall under the tour operators' category.

3. The judgment delved into the legal definitions crucial for determining liability. It highlighted that a "tour operator" is defined as a person operating tours in a tourist vehicle covered by a permit under the Motor Vehicles Act, emphasizing the need for a tourist vehicle with the requisite permit.

4. The court analyzed the historical evolution of the definition of a tour operator, emphasizing the requirement for operating tours in a tourist vehicle with a valid permit, as per the provisions of the Motor Vehicles Act.

5. The judgment referenced precedents like the Pandyan Travels case to clarify that holding a tourist permit under specific sections of the Motor Vehicles Act was essential for a vehicle to be considered a tourist vehicle, thereby impacting service tax liability.

6. Ultimately, the court concluded that the appellants were not liable to pay service tax for activities pre-10/09/2004 as they did not possess tourist permits or operate tourist vehicles. However, post-10/09/2004, the appellants were directed to pay service tax for BRA activities involving commercial concerns/schools, excluding ITDC, within the normal period of limitation.

7. The judgment emphasized that service tax could not be demanded twice for the same activity, especially when ITDC had already discharged the liability, leading to the waiver of penalties for interpretive issues. The appellants were instructed to submit a detailed computation of service tax within 30 days for verification.

8. In conclusion, the appeal was disposed of with the above directives, highlighting the importance of complying with the definitions and provisions under the law for determining service tax liability accurately.