2010 (3) TMI 438 - AT - Service Tax

Tour Operator Service- Tax demand arises on the ground that the applicants herein have engaged in Tour Operator Service by operating tourist vehicles. Held that- in the light of the decision of CCE, Vadodara v. Ghansyam Travels 2009 -TMI - 33873 - CESTAT, AHMEDABAD, holding that liability to Service tax arises only if the contract carriage fulfills the requirement of tourist vehicle under Motor Vehicles Rules. Therefore grant the prayer for waiver of pre-deposit and stay of recovery of the amount in question pending the appeal.

Summary

Issues:
1. Application for waiver of pre-deposit of Service tax and penalty.
2. Interpretation of the term "Tour Operator" under Section 65(115) of the Finance Act, 1994.
3. Determination of whether the contract carriage operated qualifies as a tourist vehicle.
4. Consideration of the Tribunal's precedent in CCE, Vadodara v. Ghansyam Travels [2009 (15) S.T.R. 45 (Tri.-Ahmd.)].
5. Granting of stay of recovery pending appeal and scheduling of final hearing.

Analysis:
1. The case involved an application for the waiver of pre-deposit of Service tax and penalty amounting to Rs. 64,34,753/- and Rs. 65,01,000/-, respectively. The tax demand was based on the allegation that the applicants were engaged in Tour Operator Service by operating tourist vehicles.

2. The interpretation of the term "Tour Operator" as per Section 65(115) of the Finance Act, 1994 was crucial. The definition encompassed persons engaged in planning, organizing, or arranging tours by any mode of transport, including operating tours in a tourist vehicle covered by a permit under the Motor Vehicles Act, 1988. The definition of "Tourist vehicle" was also outlined, emphasizing the specific requirements for such vehicles.

3. The contention of the applicants was that they were operating contract carriages, not tourist vehicles, as the vehicles did not meet the prescribed specifications under Rule 128 of the Motor Vehicles Rules. The Revenue did not challenge this submission but relied on the mere classification of the vehicles as contract carriages to assert the applicants' liability as tourist vehicle operators under Section 65(115) of the Act.

4. The Tribunal referred to the precedent set in CCE, Vadodara v. Ghansyam Travels [2009 (15) S.T.R. 45 (Tri.-Ahmd.)], which established that liability to Service tax arises only if the contract carriage fulfills the requirements of a tourist vehicle under the Motor Vehicles Rules. Based on this precedent, the Tribunal found a prima facie case for waiver and granted the prayer for waiver of pre-deposit, along with a stay of recovery pending the appeal.

5. Considering the significant tax amount involved, the prayer for early hearing was allowed, and the appeal was scheduled for final hearing on a specified date. The order was dictated and pronounced in open court, ensuring transparency and adherence to procedural formalities.