2016 (6) TMI 774 - AT - Service Tax

Tour Operator Service - The appellant s contention is that he is not a tour operator. He is not involved in the business of planning scheduling organising or arranging tours by any mode of transport. - Scope of Section 65(115) of the Finance Act 1994 during the period 2005-06 to 2009-2010 - Held that - prior to amendment made in 2008 the appellant would not fall into the category of tour operator as the vehicles are not tourist vehicles. Again the definition of tour operator has two segments. One in the first portion dealing with person engaged in the business of planning scheduling etc. of tours by any mode of transport and secondly the inclusive portion of the definition covering any person engaged in the business of operating tours in a tourist vehicle. - there is no evidence with supporting documents to sustain the case of department that the appellant operated tours in a tourist vehicle. Situation post-2008. - Held that - The definition implies something more than ordinary travel or transport undertaken. In a situation where admittedly the appellant is transporting different persons with prefixed fair to different destinations in the same vehicle without a common contract the activity will be more akin to transport of passengers rather than operating tour. More so when we consider the definition of contract carriage it is clear that the vehicle engaged should travel without stopping to pick up or set down anywhere in the journey passengers not included in the contract. The facts as pleaded in the case show such nature of transport is not being undertaken by the appellant. It is not established by Revenue by evidence except going by the nature of the permit given to the vehicle owner. Here for instance thirty different persons undertaking a travel for different distances though in the same vehicle paying prefixed fare cannot come under the business of operation of tour using such vehicle. There is absolutely no evidence to show that appellant made arrangements of accommodation to any destination. After perusing the facts and evidence presented before us and applying the law we are of the considered view that the demand is unsustainable. - Demand set aside - Decided in favor of assessee.

Summary

Issues Involved:

1. Liability to service tax under the category of tour operator service during the period 2005-06 to 2009-10.
2. Scope of the term "tour operator" as per Section 65(115) of the Finance Act, 1994, before and after the amendment by the Finance Act, 2008.
3. Engagement in the business of operating tours in a tourist vehicle (up to 2008) and tourist vehicle/contract carriage (post-2008).
4. Coverage of the appellant's activities under the term "tour" as per Section 65(113) of the Finance Act, 1994.
5. Sustainability of demand for the extended period and imposition of penalty.

Issue-wise Detailed Analysis:

1. Liability to service tax under the category of tour operator service during the period 2005-06 to 2009-10:
The appeal challenges the demand of service tax amounting to Rs. 1,93,87,293/- along with interest and penalty on the premise that the appellant provided tour operator services during the period from 01-04-2005 to 31-03-2010. The Tribunal had previously dismissed the appeal, but the Hon'ble High Court of Andhra Pradesh remanded the matter for fresh consideration with reasons and findings.

2. Scope of the term "tour operator" as per Section 65(115) of the Finance Act, 1994, before and after the amendment by the Finance Act, 2008:
The definition of "tour operator" under Section 65(115) of the Finance Act, 1994, before the 2008 amendment, included any person engaged in the business of operating tours in a tourist vehicle covered by a permit under the Motor Vehicles Act, 1988. Post-2008, the definition was expanded to include any person operating tours in a tourist vehicle or contract carriage by whatever name called, covered by a permit other than a stage carriage permit.

3. Engagement in the business of operating tours in a tourist vehicle (up to 2008) and tourist vehicle/contract carriage (post-2008):
The appellant argued that their activities did not fall within the definition of tour operator service as their buses had contract carriage permits and were not tourist vehicles as defined under Section 2(43) of the Motor Vehicle Act, 1988. The department contended that the appellant was operating tours in a tourist vehicle or contract carriage and was thus liable for service tax. The Tribunal found that prior to the 2008 amendment, there was no evidence to support the department's case that the appellant operated tours in a tourist vehicle.

4. Coverage of the appellant's activities under the term "tour" as per Section 65(113) of the Finance Act, 1994:
Section 65(113) defines "tour" as a journey from one place to another irrespective of the distance between such places. The Tribunal noted that the appellant's activities were more akin to transporting passengers from one place to another rather than operating tours. The appellant's buses operated as stage carriages, collecting individual fares from passengers traveling to different destinations, which did not fit the definition of a tour operator.

5. Sustainability of demand for the extended period and imposition of penalty:
The Tribunal found that the demand for the extended period and the imposition of penalty were unsustainable. The appellant's activities did not meet the criteria for being categorized as a tour operator, and there was no evidence to support the department's claims. The Tribunal set aside the impugned order and allowed the appeal with consequential reliefs.

Conclusion:
The Tribunal concluded that the appellant was not liable for service tax under the category of tour operator service during the period in question. The appellant's activities did not fall within the scope of the term "tour operator" as defined in Section 65(115) of the Finance Act, 1994, both before and after the 2008 amendment. The demand for the extended period and the imposition of penalty were found to be unsustainable, and the appeal was allowed with consequential reliefs.