2007 (4) TMI 243 - AT - Service Tax

Appellants had rendered Call Taxi services but did not pay Service tax - appellants were charging from the hirers of the taxi on the basis of the distances covered by the vehicle. This is enough to take the service out of the ambit of tour as defined under the Finance Act, 1994. The service in question was not taxable as tour operator service under the Act - On account of non-taxability of the service in question, the appellants are not liable to be penalised

Summary

Issues:
1. Service tax liability for "Call Taxi" services rendered.
2. Imposition of penalties under sections 76 and 77 of the Finance Act.
3. Interpretation of the definition of "tour operator" under section 65(96) of the Finance Act.

Issue 1: Service Tax Liability for "Call Taxi" Services:
The appellants provided "Call Taxi" services during April 2002-September 2003 without paying service tax. A show-cause notice was issued by the department treating them as 'tour operators' under section 65(96) of the Finance Act. The appellants paid the tax and interest during adjudication. The appellate authority reduced the penalty under section 77 but did not interfere with the penalty under section 76. The appellants disputed the service tax liability in the present appeal, but the judicial member found no reason to entertain this grievance as the appellants had already conceded the liability before the lower appellate authority.

Issue 2: Imposition of Penalties under Sections 76 and 77:
The penalties of Rs. 22,615 and Rs. 3,000 were imposed on the appellants under sections 76 and 77 of the Finance Act by the adjudicating authority. The appellate authority reduced the penalty under section 77 to Rs. 1,000 but did not modify the penalty under section 76. However, due to the non-taxability of the service provided by the appellants, the judicial member set aside both penalties, concluding that the appellants are not liable to be penalized.

Issue 3: Interpretation of the Definition of "Tour Operator" under Section 65(96) of the Finance Act:
The definition of "tour operator" under section 65(96) of the Finance Act refers to a person engaged in operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act. The question arose whether the vehicle used by the appellants for "Call Taxi" services qualified as a tourist vehicle used in the business of operating tours. The judicial member noted that the appellants charged based on distances covered, which did not align with the definition of "tour" under the Act. As the service provided was not taxable, the judicial member set aside the penalties imposed on the appellants, allowing the appeal with consequential relief.

This judgment clarifies the liability for service tax on "Call Taxi" services, the imposition of penalties under the Finance Act, and the interpretation of the definition of a "tour operator" under the relevant provisions.