2014 (5) TMI 916 - AT - Service Tax

Penalty u/s 77 & 78 - Tour Operator Service - Held that - Section 165(105)(n) covers only the tours operated in tourist vehicles which conformed to the specifications prescribed in this regard in Rule 128 of the Central Motor Vehicle Rules. Since during the period of dispute, a person operating tours in a contract carriage, not covered by the definition of Tourist Vehicle , was not covered and only the persons operating tours in tourist vehicles were covered by definition of Tour Operator , the respondent, in this case, who were operating tours in the vehicles, which were not the tourist vehicles in terms of Section 2(43) of the Motor Vehicle Act, read with the Rule 128 of the Central Motor Vehicle Rules, would not be covered by the definition of Tour Operator . We, therefore, do not find any infirmity in the impugned order. - Decided against Revenue.

Summary

Issues:
Interpretation of the definition of 'Tour Operator' and 'Tourist Vehicle' under the Finance Act, 1994.

Analysis:
The judgment involved a dispute regarding the taxability of services provided by the respondent, who operated buses for transporting employees to and from a factory. The department argued that the services fell under the category of tour operator's service, which is taxable under specific sections of the Finance Act, 1994. The jurisdictional Assistant Commissioner confirmed the service tax demands and imposed penalties. However, the Commissioner (Appeals) allowed the appeals, stating that the vehicles used were not tourist vehicles and, therefore, the activity was not taxable. This decision was based on legal precedents from the Madras High Court and the Tribunal.

During the hearing, the Departmental Representative reiterated that the services provided by the respondent were taxable as tour operator's services. On the other hand, the respondent's counsel argued that the vehicles used did not meet the definition of 'Tourist Vehicle' as per the Motor Vehicles Act, 1988, and thus, the respondent did not qualify as a 'Tour Operator.' The counsel relied on legal judgments to support this argument.

The Tribunal examined the submissions from both sides and reviewed the records. It noted that the buses provided by the respondent were ordinary buses and did not meet the specifications for tourist vehicles as per the Central Motor Vehicles Rules. The Tribunal highlighted that during the period in question, the definition of 'Tour Operator' under the Finance Act, 1994, only covered tours operated in tourist vehicles meeting specific criteria. Citing legal provisions and previous judgments, including those of the Madras High Court and the Tribunal, the Tribunal concluded that the respondent, operating tours in vehicles not classified as tourist vehicles, was not considered a 'Tour Operator.' Therefore, the appeals filed by the Revenue were dismissed.

In summary, the judgment clarified the interpretation of the definitions of 'Tour Operator' and 'Tourist Vehicle' under the Finance Act, 1994, and emphasized the importance of vehicles meeting specific criteria to qualify for taxability as tour operator services. The decision was based on legal provisions and precedents, ultimately leading to the dismissal of the Revenue's appeals.