2014 (12) TMI 240 - AT - Service Tax

Tour operator service - Service done in two pats - Stage Carriage and Contract carriage service - Whether contract carriage operation can be considered as tour and subject to Service Tax under the category of tour operator - Held that - stage carriage and contract carriage are the terms used for the type of operation. Tourist vehicle is a term in which certain specifications have been prescribed under Rule 128 of the Central Motor Vehicles Rules. There are certain broad specifications provided in general for motor vehicles. However, for tourist vehicle, the specifications provided relate to more comfort etc. It is important to note that a vehicle meeting the tourist vehicle specifications can also be used for stage carriage operation. Similarly, vehicles meeting the tourist vehicle specifications can also be used for contract carriage operation. Keeping in view the nature, tours would normally be conducted in a contract carriage and not in the stage carriage operation. In some of the impugned orders, we observe that the assessee has given the table indicating the specifications of the ordinary buses of MSRTC and the corresponding specifications for tourist vehicle. Certain certificates have also been produced from independent engineer/persons relating to the specifications of MSRTC buses. In fact the Commissioner (Appeals) in some cases based upon such statement, has allowed the assessee s appeals on the grounds that there is nothing to prove that the vehicles are tourist vehicles. We also note that these certificates are general in nature and not specific to the actual vehicles which were given for contract carriage operation. MSRTC will have not only ordinary buses but deluxe buses or luxury basis or air-conditioned buses. Some of these vehicles may or may not be meeting the specifications of tourist vehicle. In view of this position, we consider it necessary to set aside the matter in all the nine appeals and remand the matter to the original authority to examine whether any of the contract carriage operation was carried out by MSRTC using a vehicle which meets the specifications prescribed for tourist vehicle under Rule 128 of the Central Motor Vehicles Rules. - matter remanded back - Decided in favour of assessee.

Summary

Issues Involved:
1. Whether contract carriage operations by MSRTC can be considered as tours and subject to Service Tax under the category of tour operator.
2. Whether the vehicles used by MSRTC meet the specifications of tourist vehicles as defined under the Motor Vehicles Act, 1988 and Central Motor Vehicles Rules.

Detailed Analysis:

1. Contract Carriage Operations and Service Tax Liability:
The primary issue in the appeals is whether the contract carriage operations conducted by MSRTC can be classified as tours and thus be subjected to Service Tax under the category of tour operator. The Commissioner adjudicated that all operations under contract carriage fall under the definition of tour operator as per Section 165(105)(a) of the Finance Act, 1994, making MSRTC liable for Service Tax. The assessee, however, contended that their vehicles do not meet the specifications for tourist vehicles and thus should not be liable for Service Tax.

2. Specifications of Tourist Vehicles:
The definition of "tour operator" before and after 10-9-2004 was examined. Before 10-9-2004, a tour operator was defined as any person operating tours in a tourist vehicle covered by a permit under the Motor Vehicles Act. Post 10-9-2004, the definition expanded to include planning, scheduling, organizing, or arranging tours by any mode of transport, in addition to operating tours in a tourist vehicle. The Tribunal noted that MSRTC is not engaged in planning or organizing tours, thus the first part of the post-2004 definition does not apply. The second part, which involves operating tours in a tourist vehicle, remains relevant.

3. Definition and Specifications of Tourist Vehicles:
A tourist vehicle, as defined under Section 2(43) of the Motor Vehicles Act, must meet specific conditions prescribed under Rule 128 of the Central Motor Vehicles Rules. These specifications relate to comfort and other standards. The Tribunal emphasized that for a vehicle to be taxed as a tour operator, it must meet these specifications.

4. Judicial Precedents:
The Tribunal reviewed several judicial precedents, including the Hon'ble Madras High Court's judgment in the case of Secy. Federn. of Bus-operators Assn. of T.N. v. UOI, which concluded that for Service Tax to be levied, the vehicle must meet tourist vehicle specifications. The Tribunal also considered the judgments in Gandhi Travels and Prasanna Travels Pvt. Ltd., reinforcing that only vehicles meeting the tourist vehicle specifications are liable for Service Tax.

5. Examination of MSRTC Vehicles:
The Tribunal noted that MSRTC operates various types of buses, including ordinary, deluxe, and luxury buses, some of which may meet tourist vehicle specifications. The Tribunal found it necessary to remand the matter to the original authority to examine whether the vehicles used for contract carriage operations meet the specifications of tourist vehicles. If the vehicles meet the specifications, Service Tax will be payable; otherwise, it will not.

Conclusion:
The Tribunal set aside the impugned orders and remanded the matter to the original authority to determine the specifications of the vehicles used by MSRTC for contract carriage operations. MSRTC is directed to cooperate by providing detailed specifications of the vehicles used. The cross objections were disposed of in similar terms.

Pronouncement:
The judgment was pronounced in Court on 30-10-2013.