2006 (4) TMI 8 - AT - Service Tax

Service Tax Tour Operator (1) The vehicle in question does not satisfy the specification and therefore not required to be registered in the Tourist operator (2) Demand must be quantified in the Show cause notice

Summary

Issues: Challenge to revision order holding appellants liable for Service Tax as Tour Operator, imposition of penalty, quantification of demands in show cause notices, specifications of tourist vehicle under Rule 128 of Motor Vehicles Rules.

Analysis:
1. The appellants contested the revision order by the Commissioner of Central Excise, challenging their classification as Tour Operator and imposition of penalty under Section 65(78) of the Finance Act. The Deputy Commissioner dropped the initial show cause notice in 2003, but the Commissioner issued a new notice in 2005 without quantifying the demands or Service Tax in both notices.

2. The appellants argued that they were not tourist operators but registered as a contract vehicle, citing Rule 128 of Motor Vehicles Rules and Section 2(43) of Motor Vehicles Act for specifications of a tourist vehicle. They referenced a Madras High Court judgment emphasizing the need to satisfy Rule 128 specifications for tourist vehicle registration under the Finance Act.

3. The appellants' counsel presented the RC book of the disputed vehicle, demonstrating non-compliance with Rule 128 specifications for a tourist vehicle. They relied on precedents like Bayer Diagnostics India Ltd. case to argue that demands must be specified in show cause notices. Similar rulings from Allahabad High Court and Mumbai Bench were cited to support their stance.

4. The JDR contended that the demands were rightly confirmed by the Commissioner, arguing that quantification could occur post-notice issuance. The non-registration of the appellants as Tour Operators was used to justify the penalty imposition.

5. The Tribunal observed that both 2002 and 2005 show cause notices lacked demand quantification, following precedents that demands must be specified in notices. Considering the Madras High Court judgment, the vehicle in question did not meet Rule 128 specifications for a tourist vehicle, leading to the appellants' success in the appeal. The impugned order was set aside, granting relief to the appellants based on the correct defense presented.

This detailed analysis highlights the key legal arguments, precedents, and the Tribunal's decision in the case challenging the classification of the appellants as Tour Operators and the imposition of penalties.