2014 (11) TMI 165 - AT - Service Tax

Tour Operator service - supply the contract carriage business (not tourist vehicles) - whether the activity undertaken by the appellant is covered under the category of tour operators service prior to 10/09/2004 or post to 10/09/2004 - Invocation of extended period of limitation - Held that - If a tour operator having its tourist permit under Section 88 (9) of the Motor Vehicles Act, then the vehicle shall be treated as a tourist vehicle. Admittedly, in this case the appellant are neither having the tourist permit nor operating in the tourist vehicle. Therefore, the appellant are not held to be liable to pay service tax under the category of tourist operator prior to 10/09/2004. Appellants provide/supply the contract carriage business (not tourist vehicles) to their customers on their demand only - M/s. Capri has claimed the benefit of Notification 20/09 dated 07.07.2009 read with Section 75 of the Finance Act, 2011 which exempts the service provided to any person, by a tour operator having contract carriage permits for inter-state or intra-state transportation of passengers, excluding tourism, conducted tours, charter or hire service, from whole of the service tax leviable thereon under Section 66 of the said the Finance Act., which has been made applicable retrospectively w.e.f. 01.04.2000. As the said Notification and the Finance Act, 2011 were not contested by M/s. Capri before the Adjudicating Authority, therefore matter needs examination at the end of the Adjudicating Authority in the light of the decisions of this Tribunal placed before us by the ld. counsel for M/s. Capri and to decide whether M/s. Capri is liable to pay service tax under the category of Tour operator or not. Therefore, the matter needs examination at the end of the Adjudicating Authority - Matter remanded back M/s. Capri has relied on several decisions of this Tribunal or by the lower authorities, and the decisions are contrary to each other. In view of this, we hold that the extended period of limitation is not applicable in this case. Therefore, the demands confirmed by invoking the extended period of limitation are set aside. Consequently, penalties are also set aside. - Decided in favour of assessee.

Issues Involved:
1. Liability of service tax on the appellant under the category of 'tour operators' prior to 10/09/2004.
2. Liability of service tax on the appellant under the category of 'tour operators' post 10/09/2004.
3. Applicability of Notification 20/09 dated 07.07.2009 and Section 75 of the Finance Act, 2011.
4. Invocation of the extended period of limitation for raising the demand.
5. Imposition of penalties under Sections 75A, 76, 77, and 78 of the Finance Act, 1994.

Detailed Analysis:

1. Liability of Service Tax Prior to 10/09/2004:
The appellant, M/s. Capri, was engaged in providing bus services to companies for transporting their employees. The issue was whether this activity fell under the category of 'tour operators' prior to 10/09/2004. According to the definition in effect before this date, a 'tour operator' was someone operating tours in a tourist vehicle with a permit under the Motor Vehicles Act, 1988. The appellant argued that their vehicles were not tourist vehicles and did not hold tourist permits. The Tribunal examined the records and found that the vehicles were contract carriage buses, not tourist vehicles, and thus not liable for service tax under the 'tour operators' category for the period before 10/09/2004. The appeal by the revenue to impose service tax for this period was dismissed.

2. Liability of Service Tax Post 10/09/2004:
Post 10/09/2004, the definition of 'tour operator' was amended to include any person engaged in planning, scheduling, organizing, or arranging tours by any mode of transport, including operating tours in a tourist vehicle. The appellant contended that they did not plan, schedule, or organize tours; these activities were carried out by their customers. The Tribunal reviewed agreements between the appellant and their customers, which indicated that the customers planned and scheduled the bus services. Thus, the appellant was not liable for service tax under the amended definition of 'tour operator' as they did not engage in the specified activities.

3. Applicability of Notification 20/09 and Section 75 of the Finance Act, 2011:
The appellant sought to introduce Notification 20/09 dated 07.07.2009 and Section 75 of the Finance Act, 2011, which exempted certain services provided by tour operators with contract carriage permits from service tax, retrospectively from 01.04.2000. The Tribunal allowed the introduction of these grounds and remanded the matter to the Adjudicating Authority to examine the applicability of the notification and the Finance Act provisions to the appellant's case.

4. Invocation of Extended Period of Limitation:
The show-cause notice was issued on 21/01/2007 for the period October 2001 to September 2006, invoking the extended period of limitation. The appellant argued that there was no malafide intention to evade tax, as they believed they were not covered under the definition of 'tour operator.' The Tribunal found that there were conflicting decisions on similar matters and held that the extended period of limitation was not applicable. Consequently, the demands raised for the extended period were set aside.

5. Imposition of Penalties:
Given the Tribunal's findings on the extended period of limitation and the nature of the appellant's activities, the penalties imposed under Sections 75A, 76, 77, and 78 of the Finance Act, 1994, were also set aside.

Conclusion:
The Tribunal dismissed the revenue's appeal and allowed the appellant's appeal by way of remand for the limited purpose of examining the applicability of Notification 20/09 dated 07.07.2009 and Section 75 of the Finance Act, 2011. The Adjudicating Authority was instructed to provide a reasonable opportunity for the appellant to defend their case.

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