2013 (6) TMI 265 - Commissioner - Service Tax

Tour Operator - appellant had obtained the permit of vehicle as service vehicle/ordinary Bus for factory employee convenience under Section 76 of M.V. Act, 1988. - Held that - the subject vehicle has a permit to carry more than 6 persons excluding the drivers and is to be used by M/s. Ranbaxy Ltd., Malanpur for carrying persons in connection with their trade or business otherwise than for hire or reward i.e. their employees and was not used for public purposes and was authorized by the R.T.O. to be used as Private Service Vehicle . Therefore, subject motor vehicle was a Private Service Vehicle and not a tourist vehicle . To bring a person to the field of Tour Operator service, that person should have been engaged in the business of operating tours in a tourist vehicle covered by a permit granted under Motor Vehicle Act, 1988. The person must have been engaged in the business of operating tours, the tours must be conducted using tourist vehicle, the vehicle must have been under the grant of permit under Motor Vehicle Act to conduct tourism business, but in the present case, the evidences on record does not support the allegations made in the impugned Show Cause Notice. The appellant s vehicle was not a tourist vehicle as contemplated under Section 2(43) of the Motor Vehicle Act, 1988, which is sine qua non for the application of the Finance Act, 1994. Thus, if the subject vehicle was not a tourist vehicle , the provisions of Finance Act, 1994 would not apply against the appellant and more particularly the provisions of Section 65(115) and the other allied Sections 73, 75 and 76 of the Finance Act, 1994 - Decided in favor of assessee.

Issues Involved:

1. Classification of services provided by the appellant as "Tour Operator Services."
2. Liability to pay service tax on the amount received for the services.
3. Validity of the show cause notice and the impugned order.
4. Applicability of interest and penalties under Sections 73, 75, and 76 of the Finance Act, 1994.
5. Definition and applicability of "Tourist Vehicle" under the Motor Vehicles Act, 1988.

Issue-wise Detailed Analysis:

1. Classification of Services Provided by the Appellant as "Tour Operator Services":

The appellant, registered under the category of "Tour Operator Services," was scrutinized for the receipts shown in their ST-3 returns. The Department observed that amounts received for transporting employees to a factory were wrongly categorized as exempted services. The appellant argued that they were engaged in transporting staff and workers to and from a factory, not in planning, scheduling, organizing, or arranging tours. The definition under Section 65(115) of the Finance Act, 1994, was cited, which includes organizing tours in a tourist vehicle covered by a permit under the Motor Vehicles Act. The appellant contended that their services did not fall under this definition.

2. Liability to Pay Service Tax on the Amount Received for the Services:

The Department demanded service tax amounting to Rs. 1,67,230/- for the period from October 2009 to September 2010. The appellant argued that they did not charge service tax from their clients and that their services did not qualify as "Tour Operator Services." They cited several case laws to support their contention that transporting employees does not constitute organizing tours.

3. Validity of the Show Cause Notice and the Impugned Order:

The appellant challenged the show cause notice and the impugned order, arguing that the adjudicating authority did not address their legal submissions and misinterpreted the provisions of Section 65 of the Finance Act, 1994. They also argued that the impugned order was based on an uncorroborated report by the Range Superintendent, which lacked proper evidence and violated principles of natural justice.

4. Applicability of Interest and Penalties under Sections 73, 75, and 76 of the Finance Act, 1994:

The adjudicating authority confirmed the demand for service tax and ordered recovery under Section 73, along with interest under Section 75 and penalties under Section 76. The appellant argued that since their services did not fall under "Tour Operator Services," these provisions were not applicable. The impugned order imposed a penalty which was argued to be unjustified as the appellant's services were not taxable under the said category.

5. Definition and Applicability of "Tourist Vehicle" under the Motor Vehicles Act, 1988:

The definition of "Tourist Vehicle" under Section 2(43) of the Motor Vehicles Act, 1988, and Rule 128 of the Central Motor Vehicle Rules, 1989, was discussed. The appellant's vehicle was used as a "Private Service Vehicle" for factory employees, not as a "Tourist Vehicle." The adjudicating authority did not establish that the vehicle met the specifications of a "Tourist Vehicle." The appellant's permit was for factory employee conveyance, not for conducting tours.

Conclusion:

The appeal was allowed, and the impugned order was set aside. The appellant's services did not fall under the definition of "Tour Operator Services" as per Section 65(115) of the Finance Act, 1994. The vehicle used was not a "Tourist Vehicle" as defined under the Motor Vehicles Act, 1988. Consequently, the provisions of Sections 73, 75, and 76 of the Finance Act, 1994, were not applicable. The demand for service tax, interest, and penalties was found to be unsustainable. The appeal was disposed of in favor of the appellant.

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