2009 (10) TMI 457 - AT - Service Tax

Tour Operator Service- Stay- demand raised on the ground that service tax paid by principal tour operator and appellant as sub-contractor not liable. Concept of sub-contractor absent in respect of tour operator case. Avoidance of double taxation not incorporated in Finance Act. Held that- pre-deposit of Rs. 85 lakh directed.

Summary

Issues:
Levy of service tax on "Tour Operator Service", denial of abatement, bar of limitation, liability of sub-contractor, double taxation, financial position of the appellant.

Levy of Service Tax:
The appellant challenged the levy of service tax under the category of "Tour Operator Service," arguing that it was a sub-contractor and the principal tour operator had already paid the tax. The appellant contended that tourist vehicles were not used for the services and abatement was wrongly disallowed. However, the Revenue argued that there was no evidence of service tax being paid by the appellant and that the appellant had a liability to pay the tax.

Liability of Sub-contractor:
The appellant claimed to be a sub-contractor for the principal tour operator, but the Tribunal found no evidence supporting this assertion. The Tribunal highlighted that the Finance Act, 1994, does not mention sub-contractors in relation to tour operating services. The absence of proof of an agreement between the principal operator and the appellant regarding tax liability led to the rejection of the appellant's plea.

Double Taxation:
The appellant raised concerns about double taxation, alleging that the same service was taxed twice. However, the Tribunal noted that there was no evidence of an intimate connection between the services provided by the appellant and the principal operator. The Tribunal emphasized that the Finance Act does not address the avoidance of double taxation in this context.

Abatement and Bar of Limitation:
The Tribunal observed that the Adjudicating Authority did not appreciate the abatement claimed by the appellant or the plea on the bar of limitation. The appellant's arguments on these issues were dismissed due to lack of evidence and non-compliance with court directions.

Financial Position of the Appellant:
Considering the appellant's financial position, the Tribunal directed a pre-deposit of Rs. 85 lakhs to protect the Revenue's interest during the appeal. The Tribunal referred to relevant legal precedents to justify its decision and ensure a balance between the parties' interests.

In conclusion, the Tribunal upheld the service tax demand, rejected the appellant's contentions regarding sub-contractor status and double taxation, and directed a pre-deposit based on the appellant's financial position. The judgment emphasized the importance of evidence, legal compliance, and balancing the interests of both parties in tax disputes.