2016 (2) TMI 547 - AT - Service Tax

Tour operator service - The main plea is that the appellant do not get covered under the term tourist vehicles because their vehicles do not meet the specifications laid down in Rule 128 of the Motor Vehicles Rules, 1989. The other contention is that Vehicles Registration Authority grants separate licence under Section 2(7) of the Motor Vehicles Act for contract carriages and under Section 2(43) read with Rule 128 for tourist vehicles. Lastly, the contention is that they would not be covered under Service Tax levy even after 10.09.2004 because they are not engaged in the business of planning, scheduling and organizing or arranging tours. Held 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 . As already discussed, the vehicles are also not tourist vehicles so as to be covered under the second part of the definition. - Demand set aside - Decided in favor of assessee.

Issues:
1. Classification of transportation services as "Tour operator" service under the Finance Act.
2. Interpretation of the definition of "tour operator" pre and post 2004.
3. Determination of whether vehicles used for transportation qualify as "tourist vehicles" under the Motor Vehicles Act and Rules.
4. Assessment of the appellant's engagement in planning, scheduling, organizing, or arranging tours post 10.09.2004.

Analysis:
1. The primary issue in this case revolves around whether the transportation services provided by the appellant, involving carrying employees to and from specific locations, fall under the category of "Tour operator" service as defined in the Finance Act. The period of dispute spans from October 2002 to July 2007.

2. The appellant's argument is centered on not being covered under the term "tourist vehicles" due to their vehicles not meeting the specifications outlined in Rule 128 of the Motor Vehicles Rules, 1989. Additionally, they assert that they do not engage in the business of planning, scheduling, and organizing tours, thereby claiming exemption from Service Tax levy post 10.09.2004.

3. The Tribunal's analysis delves into the distinction between the pre-2004 and post-2004 levy on tour operator services. Referring to the case law and judicial pronouncements, it is established that vehicles must meet the criteria set forth in Rule 128 of the Motor Vehicles Rules to be classified as "tourist vehicles" under the definition of a tour operator service.

4. Regarding the period post 10.09.2004, the Tribunal scrutinizes whether the appellants are involved in planning, scheduling, organizing, or arranging tours. It is observed that the appellants merely provide vehicles with specific capacities and schedules as per demand, without engaging in comprehensive tour planning activities. The legislative intent behind the expanded levy on tour operators was to encompass package tours involving various modes of travel, which does not align with the appellant's business model of providing contract carriage services.

5. The Tribunal concludes that the appellant's activities do not fall within the ambit of the tour operator service definition post 10.09.2004, as they do not undertake tour planning functions and do not operate tourist vehicles as per the specified rules. Consequently, the impugned order is set aside, and the appeal is allowed.

This detailed analysis of the judgment thoroughly examines the legal intricacies surrounding the classification of transportation services and the interpretation of relevant statutory provisions under the Finance Act and Motor Vehicles Rules.

← Previous Next →