2006 (8) TMI 11 - AT - Service Tax

Service Tax Tour operator Ropeway services to hill temples Transit road journey between two ropeway boarding points by the appellant not treated as tour operator - Demand and penalty not sustainable

Summary

Issues:
Interpretation of the term 'tour' for the purpose of service tax levy on road transit between ropeway boarding points.

Analysis:
The appellant operates ropeways to two temples and sells tickets for single or combined journeys. The road journey between the ropeway boarding points is provided in Maxi Cabs, considered as 'tourist vehicles' under the Motor Vehicles Act. Service tax has been demanded from the appellant treating them as a "tour operator" for the road transit between the boarding points. The appellant argues that the tour is from Hardwar to the temples, and the road journey is incidental. The definition of 'tour' is crucial in determining the levy.

The appellant contends that the road journey between the ropeway boarding points is not a tour in itself but merely incidental to the main pilgrimage tour to the temples. They rely on a Tribunal decision stating that statutory definitions should not distort the normal meaning of words. The definition of 'tour' in the statute is debated, emphasizing the normal and natural understanding of the term.

The SDR argues that the definition of 'tour' in the statute includes any journey from one place to another, irrespective of distance. It is asserted that the 4 km road journey qualifies as a tour under this definition. The SDR highlights that the journey satisfies other statutory requirements, such as being in a tourist vehicle and provided by a tour operator. A deduction has also been allowed while valuing the service.

The Tribunal examines the concept of 'tour' for service tax levy. It is clarified that the pilgrimage to the temples constitutes the tour, not the transit between boarding points. The Tribunal rejects an artificial interpretation of 'tour' and stresses that the road link is incidental to the pilgrimage. The decision emphasizes that for a levy to apply, there must be a genuine tour, which in this case, is the visit to the temples, not the road transit.

Conclusively, the Tribunal rules in favor of the appellant, stating that there is no tour in a tourist vehicle as per the statute to warrant the levy. The duty demand is deemed unsustainable, leading to the setting aside of the impugned order and allowing the appeals with consequential relief to the appellants. Penalty imposition is also negated due to the unsustainable tax demand.