2015 (11) TMI 835 - AT - Service Tax

Demand of service tax - Tour Operator Service - Held that - appellants have only planned for providing vehicles of a specific capacity with a particular schedule. We also note that at the time of expansion of the definition of Tour Operator on 10/09/2004, CBEC Circular No. 80/10/2004-ST dated 17/09/2004 clarified that while the existing levy on tour operators engaged in operating tours in tourist vehicles remain as such, in case of a package tour (which are planned, scheduled, organized or arranged by tour operators), the scope of the levy is being extended by removing the limitations regarding transportation by tourist vehicle only which means it will include air-rail-cab travel also. - appellants provide/supply the contract carriage business (not tourist vehicles) to their customers on their demand only. Therefore the activity of the appellant is not covered by the definition of Tour Operator for the period post 10-09-2004. - Decided in favor of assessee. Employees of only those companies/factories etc. who had entered into a contract with M/s. Ideal had the authority to board the buses at pre-determined pick-up points at fixed timings agreed upon and M/s. Ideal had no authority to pick-up or drop any other passenger en-route. Thus, I find from the above that M/s. Ideal were not engaged in the business of planning, scheduling, organizing or arranging package tour of their own as provided under the new definition of tour operator service but were adhering to the conditions laid down in the agreements entered into with various customers. Thus it cannot be said that they were covered under the first part of the amended definition of tour operator also . - activity does not get covered under the Tour Operator Service post 10-09-2004. - Decided in favor of assessee. Activity of organizing picnic tours etc - Held that - this activity will fall under the ambit of planning, scheduling etc in terms of the first part of the definition irrespective of the fact that the vehicle is not a tourist vehicle. This is because the two parts of the definition are independent and for the activity to be taxable, either part may be satisfied. - find there is reasonable cause to waive the penalties in this case in terms of Section 80 - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Classification of services provided by the appellants as "Tour Operator Service" under Section 65(115) of the Finance Act.
2. Applicability of service tax to services provided prior to 10.09.2004.
3. Applicability of service tax to services provided post 10.09.2004.
4. Interpretation of the definition of "Tour Operator" and "Tourist Vehicle" under the Motor Vehicles Act and Central Motor Vehicles Rules.

Detailed Analysis:

1. Classification of Services Provided by the Appellants:
The appellants were engaged in providing buses/vehicles on hire on a contractual basis to various customers. The Department contended that these services fell under "Tour Operator Service" as defined in Section 65(115) and were chargeable to service tax. The vehicles operated between specified points under contract carriage permits issued by the RTO.

2. Applicability of Service Tax Prior to 10.09.2004:
The definition of "Tour Operator" before 10.09.2004 required the vehicle to be a "tourist vehicle" as per Section 2(43) of the Motor Vehicles Act, which necessitated conformity to specifications under Rule 128 of the Central Motor Vehicles Rules. The Tribunal found that the vehicles operated by the appellants did not meet these specifications and were not considered "tourist vehicles" by the RTO. Therefore, the services provided by the appellants were not taxable as "Tour Operator Service" for the period prior to 10.09.2004.

3. Applicability of Service Tax Post 10.09.2004:
The definition of "Tour Operator" was expanded on 10.09.2004 to include any person engaged in the business of planning, scheduling, organizing, or arranging tours by any mode of transport. The Tribunal examined whether the appellants' activities fell under this expanded definition. It was found that the appellants were merely providing vehicles under specific schedules and routes as per contracts with their clients, without engaging in planning or organizing tours. Therefore, the services provided by the appellants did not fall under the "Tour Operator" service even after the definition was expanded.

4. Interpretation of "Tour Operator" and "Tourist Vehicle":
The Tribunal referred to various judgments to interpret the definitions. It was established that a vehicle must meet the specifications of a "tourist vehicle" under Rule 128 to be considered under "Tour Operator Service." The Tribunal upheld that the appellants' vehicles did not meet these specifications. Additionally, the Tribunal clarified that the expanded definition post 10.09.2004 did not intend to include services like those provided by the appellants, which were limited to providing vehicles on a contractual basis without planning or organizing tours.

Separate Judgments:
- The appeal of General Travels was partly allowed as their activities for organizing picnics fell under the ambit of planning and scheduling tours, making them taxable under the first part of the definition post 10.09.2004. However, penalties were waived due to the prolonged confusion over taxability.
- Appeals of all other parties were allowed, and the appeals of the Revenue were dismissed.

Conclusion:
The Tribunal concluded that the services provided by the appellants were not taxable under "Tour Operator Service" for both periods before and after 10.09.2004, except for the specific case of General Travels organizing picnics. The appeals of all parties except General Travels were allowed, and the appeals of the Revenue were dismissed.