2008 (6) TMI 83 - AT - Service Tax

Demand confirmed by treating the appellants as provider of tour operator service - Case of the assessee was that they are not having tourist permit- In view of the decision of the Hon ble High Court in the case Secy. Federn. Of Bus-Operators Assn. of T.N. vs. UOI and Tribunal as the appellants are not having tourist permit, they are not liable to service tax as provider of tour operator. Impugned orders are set aside and appeals are allowed.

Summary

Issues:
1. Whether the appellants are liable to pay service tax as a tour operator based on the demand made by the Revenue.
2. Interpretation of the definition of a tour operator under the Motor Vehicles Act and related rules.
3. Comparison of the appellants' contract carriage permit with a tourist permit in determining liability for service tax.
4. Analysis of relevant legal precedents and decisions cited by both parties.

Analysis:
The Appellate Tribunal CESTAT, New Delhi heard appeals against orders confirming the demand of service tax on the appellants, treating them as tour operators. The Revenue contended that the appellants, having a contract carriage permit and deploying vehicles for employee transport, should be considered tour operators. The appellants argued they lacked a tourist permit, a key requirement for being classified as a tour operator. They cited tribunal decisions supporting their stance. The Revenue, however, emphasized the significance of the permit issued under the Motor Vehicles Act, suggesting that possessing a contract carriage permit implied liability for service tax. They relied on legal precedents, including a decision by the Hon'ble Madras High Court.

In examining the case, the Tribunal distinguished it from precedent where the assessee had a tourist permit but operated as a stage carriage. The Tribunal referenced the Madras High Court decision, which outlined specific conditions for a vehicle to be recognized as a tourist vehicle under the Motor Vehicles Act. Notably, the Court emphasized that a vehicle must conform to Rule 128 of the Motor Vehicles Rules to be classified as a tourist vehicle. Given that the appellants lacked a tourist permit and did not meet the specified conditions, they were not considered liable for service tax as tour operators. The Tribunal aligned with this interpretation, overturning the impugned orders and allowing the appeals.

The decision underscores the importance of the specific permit type and adherence to regulatory standards in determining liability for service tax as a tour operator. By clarifying the legal requirements and referencing relevant precedents, the Tribunal provided a comprehensive analysis that favored the appellants' position. The judgment highlights the necessity for strict compliance with regulatory criteria to establish the classification of a service provider under tax laws, ensuring clarity and consistency in tax liability assessments.