2015 (12) TMI 1316 - AT - Service Tax

Demand of service tax - Tour operator service - whether the activity of transportation services, that is carrying employees of companies from specific points to the factory/establishment and back can be categorized under Tour operator service as defined under Section 65(105)(n) read with Section 65(115) of the Finance Act - Held that - neither the adjudicating authority nor the Commissioner (Appeals) had brought out the clear distinction between the levy on tour operator service pre - 2004 and post - 2004. As regards the period pre - 2004, the issue has been dealt with total in Tribunal s Order in the case of M/s Jai Somnath Transportation and Others 2015 (11) TMI 835 - CESTAT MUMBAI . In the said order reliance was placed on various judicial pronouncements including of the Hon ble Madras High Court in the case of Secy. Federn. Of Bus-Operators Assn. of T.N. Vs. Union of India 2001 (4) TMI 7 - MADRAS HIGH COURT holding that the vehicles which are covered under the definition in Section 2(43) of Motor Vehicles Act read with Rule 128 of Central Motor Vehicles Rules alone would come within the definition of Tourist Vehicles in Section 65(115) and be covered under the Tour Operator service - intent of the legislature was to expand the levy of service tax for planning/scheduling/organizing/arranging the package tours for all modes of travel. It was not intended to expand the scope to cases such as the present one. In the present case, the appellants provide/supply the contract carriage business (not tourist vehicles) to their customers on their demand only. Therefore the activity of the appellant is not covered by the definition of Tour Operator for the period post 10-09-2004. Lower authorities have given no reasoning to state that the activity of the appellants post 10.9.2004 gets covered under the first part of the definition of Tour Operator service. As already observed above, the appellant were providing vehicles/buses to their customers on agreed terms during the period specified for an agreed commercial consideration for transportation of the company/factory employees, at specified places through specified routes and timings. It is also not shown by Revenue that the appellant had authority to pick-up or drop the said persons at any place/route of their choice or they had flexibility to alter the route or timings according to their own choice or whims and fancies. Therefore the employees of only those companies/factories etc., who had entered into a contract had the authority to board the buses at pre-determined pick-up points at fixed timings agreed upon. No element of planning or scheduling is therefore shown to have been done by the appellant. They only act at the company s behest-II. Thus, we find from the above that appellant were not engaged in the business of planning, scheduling, organizing or arranging package tour of their own as provided under the new definition of tour operator service but were adhering to the conditions laid down with various customers. Therefore it cannot be said that they were covered under the first part of the amended definition of tour operator . - Decided in favour of assessee.

Summary

Issues:
1. Whether transportation services for carrying employees can be categorized as "Tour operator" service under the Finance Act.
2. Interpretation of the definition of "Tour operator" service pre and post-2004.
3. Determining if the vehicles used meet the specifications for being classified as "tourist vehicles."
4. Analysis of the appellant's engagement in planning, scheduling, organizing, or arranging tours.

Issue 1:
The primary issue in this case revolves around whether transportation services for carrying employees of companies can fall under the category of "Tour operator" service as defined under Section 65(105)(n) read with Section 65(115) of the Finance Act for the period of October 2002 to July 2007.

Issue 2:
The judgment delves into the interpretation of the definition of "Tour operator" service both pre and post-2004. It highlights the distinction in the levy on tour operator service before and after 2004, citing a previous Tribunal's Order and judicial pronouncements to clarify the conditions for a vehicle to be considered a "tourist vehicle" under the Motor Vehicles Act and Rules.

Issue 3:
The analysis also involves determining whether the vehicles used by the appellant meet the specifications laid down in Rule 128 of the Motor Vehicles Rules, 1989, to be classified as "tourist vehicles." The judgment emphasizes the necessity for vehicles to conform to these conditions to be covered under the tour operator service.

Issue 4:
Furthermore, the judgment scrutinizes the appellant's engagement in planning, scheduling, organizing, or arranging tours post-10th September 2004. It assesses whether the appellants were involved in these activities or merely provided contract carriage services based on customer demand without engaging in tour planning or scheduling, ultimately concluding that the appellant's activities did not fall under the definition of "Tour operator" service post-2004.

The judgment thoroughly examines each issue, referencing legal provisions, previous orders, and legislative intent to arrive at a well-reasoned decision. It clarifies the criteria for vehicles to be considered "tourist vehicles" and the requirements for activities to be classified under the tour operator service, providing a comprehensive analysis for each issue raised in the case.