2017 (11) TMI 34 - AT - Service Tax

Tour operator service - benefit of abatement - N/N. 25/2012-ST, dt. 20.06.2012 - Held that - for a vehicle having stage carriage permit like busses owned by the appellants, to operate for private persons/marriage parties under a contract, such basis will then necessarily be required to obtain a contract carriage permit or a special permit as aforesaid. In our view, once such a contract carriage permit or a special permit is obtained, the bus will then no longer has the character of a stage carriage but will instead acquire the colour of a contract carriage/special permit garage - Viewed in this light, the busses of the appellants having become contract carriage or a special permit garage even if for temporary permit to provide them on hire for marriages/pilgrimage etc. this cannot be considered as a stage carriage for that short period and hence cannot then claim to be recovered under the negative list of services by a stage carriage or for that matter covered by the exemptions, provided under section No. 23 of notification 25/2012 since that exemption will not cover contract carriage on hire - demand with interest sustained. Penalties - Held that - the matter is one of the unproductive and that the question of taxability on the services was mired in confusion and litigation, the penalties imposed in all these cases are set aside. Appeal allowed in part.

Summary

Issues:
1. Tax liability on tour operator services provided by appellants.
2. Interpretation of the negative list and exemptions under relevant provisions.
3. Applicability of service tax on transportation of passengers by stage carriage.
4. Benefit of abatement from taxable value extended by adjudicating authority.

Analysis:

Issue 1: Tax liability on tour operator services provided by appellants
The appeals raised a common question of law regarding the demand of differential tax against the appellants under "Tour Operator Service." The appellants provided various chartered/contract carriage/tour services, including hiring buses and operating tours for different entities. The department contended that these services fell within the ambit of Tour Operator service, attracting service tax liability. After due process of adjudication, the lower authorities confirmed the tax liability, interest, and penalties. The impugned orders upheld the tax liability demanded from a certain period onwards.

Issue 2: Interpretation of the negative list and exemptions under relevant provisions
The appellants argued that the negative list regimen was in vogue from a specific date, and all services not exempted were liable to service tax. The relevant sections and notifications were cited to support their contention. However, the department submitted that the negative list applied to all services unless specifically exempted. The Tribunal found that the services provided by the appellants did not fall under the exemptions provided, leading to the confirmation of tax liability from a certain date onwards.

Issue 3: Applicability of service tax on transportation of passengers by stage carriage
The Tribunal examined the provisions of the Motor Vehicles Act, 1988 to understand the issue better. It was noted that for vehicles with a "stage carriage" permit to operate under a contract for private events, a contract carriage permit or a special permit was required. Once such a permit was obtained, the vehicle would no longer be considered a stage carriage but would be categorized as a contract carriage. Therefore, the demand for service tax on the services provided by the appellants from a certain date onwards was upheld.

Issue 4: Benefit of abatement from taxable value extended by adjudicating authority
The Revenue's appeal was against the extension of abatement from the taxable value by the adjudicating authority. Since this issue was interconnected with the appeals of the appellants, it was also taken up for disposal. The Tribunal's findings in the appeals of the appellants were applied to the Revenue's appeal, leading to its disposal in line with the decisions made regarding tax liability on tour operator services.

In conclusion, the Tribunal upheld the tax liability on the tour operator services provided by the appellants from a certain date onwards, based on the interpretation of relevant provisions and the Motor Vehicles Act. The penalties imposed were set aside considering the confusion and litigation surrounding the taxability of the services. The Revenue's appeal was disposed of in line with the decisions made in the appellants' appeals.