2008 (11) TMI 25 - AT - Service Tax

Appellants are owning buses, have contract carriage permits tour operator service - applicability of Notification No.15/2007granting partial exemption to the said services in view of prevalent practice - matter remanded to the original authority to consider the applicability of the Notification & work out the demand of duty accordingly - considering that the dispute has been lingering and that a Section 11C Notification has been issued, this is not a fit case for imposition of penalty

Summary

Issues:
1. Levy of service tax on services provided by the tour operator for transport of passengers.
2. Applicability of Notification No.15/2007-Service Tax for partial exemption.
3. Imposition of penalty in the case.

Analysis:
1. The appeal pertains to the levy of service tax on services provided by the appellant, who owns 12 buses with contract carriage permits. The order under challenge upheld the demand of service tax amounting to Rs.1,61,467 for the period from 1.4.2000 to 19.10.2000, along with a penalty. The appellant contended that the levy of service tax was in dispute, citing a general practice of non-levy in the category and referring to a Section 11C Notification No.15/2007-Service Tax dated 4.4.2007, which granted partial exemption to such services. The appellant claimed eligibility for the exemption under this notification.

2. The Departmental Representative argued that the order by the Commissioner (Appeals) was issued before the receipt of Notification No.15/2007, and thus, the applicability of the notification needed examination based on its conditions. The Tribunal, after considering the submissions from both sides, decided to set aside the orders of the Commissioner (Appeals) and the original authority. The matter was remanded to the original authority to evaluate the applicability of Notification No.15/2007-Service Tax and determine the duty demand accordingly.

3. In light of the prolonged dispute and the issuance of a Section 11C Notification granting partial exemption due to prevalent practice, the Tribunal concluded that the case was not suitable for the imposition of a penalty. Consequently, the appeal was allowed, and the matter was remanded for further consideration based on the terms discussed in the judgment. The decision was dictated and pronounced in an open court setting.

This comprehensive analysis covers the issues of service tax levy, the application of the notification for partial exemption, and the decision regarding the penalty in the case.