2013 (12) TMI 915 - AT - Service Tax

Demand of service tax - Tour Operators service - Held that - assessees are only renting their vehicles. We also find that the department could not bring out on record that the assessees are engaged in the business of planning, scheduling, organizing or arranging tours. In these circumstances, the assessees cannot be termed as tour operators. Therefore, the demands of Service Tax against them are not sustainable in law. As the demands are not sustainable, the penalties also do not survive - Decided in favour of assessee.

Summary

Issues:
1. Restoration of appeal for non-compliance with statutory provisions.
2. Classification of services provided by the assessee as 'Tour Operators' service.
3. Interpretation of the definition of 'Tour Operators' under the Finance Act, 1994.
4. Assessment of liability for service tax based on the nature of services provided.
5. Determination of penalties imposed under the Finance Act, 1994.

Issue 1: Restoration of appeal for non-compliance with statutory provisions
The applicant filed an application for restoration of Appeal No. ST/317/09, which was dismissed for non-compliance with Section 35F of the Central Excise Act, 1944. The applicant had deposited the required amount before the Commissioner (Appeals), leading to the restoration of the appeal by recalling the earlier dismissal order.

Issue 2: Classification of services provided by the assessee as 'Tour Operators' service
The case involved allegations against the assessee, a government-owned corporation, for providing tour services under contract-carriage and stage-carriage basis, falling under the category of 'Tour Operators' service as per the Finance Act, 1994. Show cause notices were issued for the period from 1.4.2001 to 31.3.2008, leading to appeals before the Commissioner (Appeals) by both the assessee and the revenue.

Issue 3: Interpretation of the definition of 'Tour Operators' under the Finance Act, 1994
The contention of the assessee was that they were not tour operators as they did not meet the specifications for tourist vehicles under the Motor Vehicles Act. The assessee argued that they did not arrange tours or operate tourist vehicles, thus challenging the applicability of service tax on their services.

Issue 4: Assessment of liability for service tax based on the nature of services provided
The Additional Commissioner argued that the assessee provided services falling under the definition of 'tour operators' based on the broad definition of 'tour' under the Finance Act, 1994. However, the Tribunal found that the assessee was only renting vehicles and not engaged in planning, scheduling, or organizing tours, leading to the dismissal of the demands for service tax and penalties.

Issue 5: Determination of penalties imposed under the Finance Act, 1994
The Tribunal allowed the assessee's appeals and dismissed the Revenue's appeals as the demands for service tax were found to be unsustainable in law due to the lack of evidence showing the assessee's engagement in tour planning or organizing activities. Consequently, the penalties imposed were also set aside.

This judgment addressed the restoration of an appeal, the classification of services provided by the assessee, the interpretation of the definition of 'Tour Operators,' the assessment of liability for service tax, and the determination of penalties. The Tribunal found in favor of the assessee, ruling that they were not tour operators based on the lack of evidence supporting their engagement in tour planning activities, leading to the dismissal of demands for service tax and penalties.