2009 (2) TMI 90 - AT - Service Tax

Tour operator - transport of employees of BHEL to their factory and back scope of the levy was expanded to include tours operated by any person engaged in the business of planning, scheduling, organizing or arranging tours w.e.f. 10-9-2004 - liability to pay service tax during the period 1-10-2004 to 31-12-2005 since appellant did not engage in planning, scheduling, organizing or arranging tours, they only provided transport, they are not liable to pay tax as Tour Operator

Summary

Issues:
1. Liability of Tamil Nadu State Transport Corporation (TNSTC) to pay service tax for transporting employees and groups of people under the category "tour operator."
2. Interpretation of the definition of "tour operator" before and after the amendment.
3. Applicability of penalties, interest, and demand of service tax on TNSTC.

Analysis:

Issue 1:
The case involved the liability of TNSTC to pay service tax for transporting employees of BHEL and groups of people under the category "tour operator." The Additional Commissioner had initially adjudicated the liability during a specific period, which was later challenged in the appeal.

Issue 2:
The interpretation of the definition of "tour operator" was crucial in this case. The definition was amended with effect from 10-9-2004 to include any person engaged in planning, scheduling, organizing, or arranging tours by any mode of transport. This amendment expanded the scope of the levy to cover a broader range of service providers beyond those using tourist vehicles.

Issue 3:
The penalties, interest, and demand of service tax imposed on TNSTC were contested in the appeal. TNSTC argued that the penalties and interest were not sustainable as their buses were not tourist vehicles and did not possess tourist permits. They claimed that the charge of suppression could not be upheld against them.

The Tribunal carefully analyzed the facts and submissions. It noted that the scope of the levy under the category "tour operator" was expanded with the 2004 amendment to include tours operated by any person engaged in planning, scheduling, organizing, or arranging tours by any mode of transport. The clarification issued by the Board emphasized that the levy was extended to package tour operators using different modes of transport.

Ultimately, the Tribunal found that TNSTC did not engage in planning, scheduling, organizing, or arranging tours but only provided transport services. As a result, the liability of TNSTC to pay service tax under the tour operator service was deemed not in accordance with the law. The impugned order was set aside, and the appeal filed by TNSTC was allowed.