2008 (11) TMI 163 - AT - Service Tax

Service Tax on Tour Operator Tourist Vehicle - unless the vehicle of the contract carriage permit holder fulfils the requirement as mentioned in Central Motor Vehicle Rules of a tourist vehicle , merely because he is holding the contract carriage permit, he does not become liable to tour operator service. It is not the case of the revenue that these vehicles fulfil the requirement of the tourist vehicles as per Rules Demand can not be confirmed.

Summary

Issues involved:
Determining whether 10 buses operated as contract carriage are liable for service tax as a tour operator.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Ahmedabad involved the question of whether 10 buses operated as contract carriage by the respondents should be charged service tax as a tour operator. The Commissioner (Appeals) had relied on a decision of the Hon'ble High Court of Madras, which was also cited by the revenue to argue that the respondents are liable to pay service tax. The revenue contended that the respondents, M/s. Ghanshyam Travels, were providing services as a 'tour operator' in their tourist vehicles covered by a permit granted under the Motor Vehicles Act, 1988. The revenue emphasized that the buses used by Ghanshyam Travels were registered as contract carriages under the Motor Vehicles Act, 1988, and had obtained a contract carriage permit. The revenue argued that obtaining a contract carriage permit was sufficient for the levy of service tax as a tour operator.

Upon considering the statutory provisions of the Finance Act, 1994, the Motor Vehicles Act, 1988, and the rules framed thereunder, the Tribunal noted the differing interpretations between the revenue and the Commissioner (Appeals). The Commissioner (Appeals) had held that merely obtaining a contract carriage permit was not enough to render the vehicles liable for service tax as a tour operator. The Commissioner had stressed that the vehicles should also meet the definition of a "tourist vehicle" as per the Motor Vehicles Act, 1988, read with specific rules. The Commissioner referred to Rule 128, which outlines specifications for a tourist vehicle, and emphasized that these requirements must be fulfilled for the vehicles to be subject to service tax as a tour operator.

The Tribunal analyzed specific paragraphs from the decision of the Hon'ble High Court of Madras to determine the applicability of the case law to the present appeal. The Tribunal highlighted the importance of the vehicles meeting the definition of a tourist vehicle under the Motor Vehicles Act, 1988, and complying with the specifications outlined in the rules. It was noted that if the vehicles did not qualify as tourist vehicles as per the Act and rules, they would not be liable for service tax as a tour operator under the Finance Act, 1994.

Ultimately, the Tribunal concluded that since the vehicles operated under the contract carriage permit did not fulfill the requirements of a "tourist vehicle" as per the Central Motor Vehicle Rules, they could not be considered liable for service tax as a tour operator. The appeal was dismissed based on the lack of substantiation that the vehicles met the criteria for being classified as tourist vehicles, as required by the relevant laws and rules.

This detailed analysis highlights the key arguments presented by the revenue and the Commissioner (Appeals), the interpretation of statutory provisions, and the application of case law to determine the tax liability of the vehicles operated under a contract carriage permit.