2006 (11) TMI 20 - HC - Service Tax

Tour Operator-Service tax Alleged that tourist operator were liable to service tax- Appellant contention is that he not liable to pay service tax Taxing authority levied service tax based on tourist permit

Summary

Issues:
1. Imposition of service tax on tour operators by the Union Government.
2. Challenge to the notice issued for registration under Section 69 of the Finance Act, 1994.
3. Interpretation of the definition of "Taxable Service" and "tour" under Section 65(76) of the Act.
4. Examination of the nature of tax imposed by the State for raising revenue.
5. Differentiation between tax and service charge.
6. Validity of the order of the learned single Judge and the appeal challenging the same.

Analysis:

1. The judgment pertains to the imposition of service tax on tour operators by the Union Government. The Appellant, a recognized tourist operator in South India, was issued a notice to register under Section 69 of the Finance Act, 1994 for levying service tax. The Appellant, along with other operators, filed writ petitions seeking to quash the notice.

2. The learned single Judge dismissed the writ petitions, leading the Appellant to file a writ appeal challenging the order on various grounds. Upon hearing the parties and reviewing the order, the High Court found no grounds for interference. The single Judge had considered relevant provisions of the Finance Act, contentions raised, and provided valid reasons for the conclusions, rendering a correct decision based on proper interpretation of the law.

3. The High Court analyzed the definition of "Taxable Service," which includes services provided by a tour operator in relation to a tour. The term "tour" was defined under Section 65(76) of the Act as a journey from place to place. The services offered by a tourist operator, such as transportation, sightseeing, ticketing, and accommodation arrangements, fall under taxable services. The Court rejected the Appellant's argument that they were not liable for service tax, emphasizing that the tax is collected from tourists and not directly from the operator.

4. Regarding the nature of tax imposed by the State, the Court highlighted the components of a taxing statute, including the subject of the tax, the liable person, and the tax rate. It emphasized that the statute must be strictly construed, and in this case, the service tax based on tourist vehicle permits was deemed appropriate without delving into the actual nature of the operator's business beyond the permit.

5. The Court differentiated between tax and service charge, stating that they are distinct components and cannot be merged. It cited precedents to support the unique nature of service tax and rejected the Appellant's argument equating service charge to tax. The judgment aligned with previous decisions by the Apex Court, affirming the legality of the service tax imposition.

6. Ultimately, the High Court upheld the order of the learned single Judge, deeming it well-considered and legally valid. Each aspect was thoroughly examined, leading to the dismissal of the appeal for lacking merit. The Court concurred with the conclusions reached by the single Judge, affirming the validity of the service tax imposition on tour operators.