2012 (11) TMI 787 - AT - Service Tax

Tour Operator Services - appellants providing the services using their own vehicles and also using hired vehicles belonging to third parties - benefit of Notification No. 15/2007 Held that - the activities of the appellant will fall under the category of Tour Operator Services even when they use vehicles belonging to third parties Extended period of limitation - held that - appellant failed to disclose the service charges, in respect of services rendered using vehicles of third parties, in the returns filed by them. - they have collected the service tax from their customers. - Extended period of limitation to be invoked - in favor of revenue. Penalty - held that - when penalty under Section 78 is sustained, there is no justification for sustaining a separate penalty under section 76. Notification 15/2007 has, for the period from 01.04.2000 onwards, has exempted service tax on value in excess of 40% of the gross amount - held that - direct the original authority to requantify the tax liability and interest and the penalty under section 78 after allowing the benefit of exemption

Summary

Issues:
- Applicability of service tax under the category of Tour Operator Services for services rendered using vehicles of third parties
- Imposition of penalties under Sections 76, 77, and 78
- Claim for benefit under Notification No. 15/2007-ST

Analysis:

The appeal involved a dispute regarding the liability of service tax under the category of Tour Operator Services for services provided using vehicles of third parties. The appellants argued that their activities did not fall under Tour Operator Services as they were merely operating vehicles on behalf of owners. They contended that if any service tax was due, it should be under Business Auxiliary Services. However, the Tribunal held that the appellants' activities fell within the definition of "tour" and "tour operator" as per relevant provisions. The Tribunal concluded that the appellants were liable to pay service tax under Tour Operator Services for services rendered using vehicles of third parties.

Regarding the imposition of penalties under Sections 76, 77, and 78, the Tribunal upheld the penalty under Section 78 but set aside the penalty under Section 76. The Tribunal justified the invocation of the extended period of limitation for demanding service tax and imposing penalties due to the appellants' failure to disclose service charges despite collecting service tax from customers. The Tribunal also directed the original authority to requantify the tax liability and penalties after allowing the benefit of exemption under Notification No. 15/2007-ST.

In conclusion, the Tribunal disposed of the appeal by holding the appellants liable for service tax under Tour Operator Services for services using vehicles of third parties, imposing penalties under Section 78 and Section 77, setting aside the penalty under Section 76, and granting the appellants the benefit of exemption under Notification No. 15/2007-ST. The original authority was directed to reassess the tax liability, interest, and penalties in light of the granted exemption.