2008 (10) TMI 113 - AT - Service Tax

Tour operator s service - vehicles (buses) provided for conveyance of client s staff -no dispute that the vehicles were being operated as contract carriage but none of the buses being used had been granted tourist permit - vehicles being used for operating tours are not tourist vehicle - hence appellant cannot be said to be a tour operators - no infirmity in the impugned order setting aside the service tax demand for the period prior to 10-9-2004 - Revenue s appeals are dismissed

Summary

Issues:
Interpretation of "tour operator's service" under Section 65(52) of the Finance Act, 1994 for service tax liability on providing buses for staff conveyance.

Analysis:
The issue in the appeals revolved around whether providing 47 seater semi-deluxe buses for staff conveyance constituted "tour operator's service" under Section 65(52) of the Finance Act, 1994, attracting service tax liability from June 2002 to March 2005. The Appellants had provided buses to M/s. IOCL Panipat and M/s. L&T Limited for staff transportation without possessing a "tourist permit" as mandated by the Central Motor Vehicle Rules. The CCE (Appeals) had set aside the service tax demand for the period before 10-9-2004, stating that service tax was only applicable if tours were operated in vehicles with a tourist permit. The Revenue challenged this decision, arguing that the Appellants should be treated as tour operators based on a judgment from the Madras High Court.

The departmental representative contended that the Appellants should be considered tour operators based on the Madras High Court judgment in a similar case. On the other hand, the Respondents' counsel cited a Division Bench judgment of the Madras High Court, which clarified that the permit required under Section 65(52) of the Finance Act need not specifically be a tourist permit but could be any permit under the Central Motor Vehicles Act. The counsel highlighted that the vehicles used did not have tourist permits or meet the criteria for a tourist vehicle under the Motor Vehicles Act and Central Motor Vehicle Rules.

After considering the arguments, the Tribunal found that the vehicles used for staff conveyance did not qualify as "tourist vehicles" as defined under the Motor Vehicles Act and Central Motor Vehicle Rules. Citing the Madras High Court's judgment, the Tribunal concluded that the Appellants could not be categorized as tour operators under Section 65(52) of the Finance Act. Therefore, the impugned order setting aside the service tax demand before 10-9-2004 was upheld, and the Revenue's appeals were dismissed.