2013 (2) TMI 357 - HC - Service Tax

Ropeway services - whether will come within the meaning of tour and accordingly, service tax is payable thereon - whether the assessee was a tour operator or not? - Held that - Tribunal has held that assessee is not a tour operator as assessee provides transportation facility from one of its establishments to another establishment of the assessee. This facility is not the main business of the assessee, but is an ancillary to its main business of providing ropeway service. By providing the facility of transportation from Mansa Devi to Chandi Devi and vice versa, assessee did not carry out tour operation. It facilitated journey of its clients from one place to the other as is being done by the passenger transporters while carrying out their transportation business. No scope of interference required - no service tax liability arises.

Summary

Issues:
1. Whether the appellant, operating ropeways at two establishments, is liable to pay service tax for providing transportation services between the establishments, and whether the appellant qualifies as a tour operator for tax purposes.

Analysis:
The appellant operates ropeways at two establishments in Hardwar, requiring a fee for their use. Additionally, the appellant offers transportation services between the two establishments, charging clients for the distance covered by vehicles. The appellant argued that this transportation service should be considered a "tour," attracting service tax. However, to levy tax as a tour service, it must be established that the appellant functions as a tour operator. The Tribunal determined that the appellant does not qualify as a tour operator since providing transportation between its establishments is not its primary business but an ancillary service to the main ropeway operation. The Tribunal concluded that the appellant merely facilitates the journey of clients between locations, akin to passenger transporters, and does not engage in tour operations.

The crucial question revolved around whether the appellant's provision of transportation services between its establishments constituted tour operations, necessitating service tax payment. The Tribunal's decision hinged on the distinction between the appellant's primary business of ropeway services and the ancillary transportation service provided. As the transportation service was found to be secondary to the main ropeway operation and akin to regular passenger transport, the appellant was not classified as a tour operator. Consequently, the Tribunal held that the appellant was not liable to pay service tax for the transportation services provided between its establishments.

In light of the above analysis, the High Court upheld the Tribunal's decision, emphasizing that the appellant's transportation service was ancillary to its main business of operating ropeways. The Court concurred with the Tribunal's finding that the appellant's facilitation of client journeys between its establishments did not constitute tour operations, akin to regular passenger transport services. Therefore, the Court dismissed the appeal and reference, affirming that there was no basis for interference in the Tribunal's decision regarding the appellant's liability for service tax on the transportation services provided between its establishments.