2016 (11) TMI 642 - AT - Service Tax

Receipt of income on account of Hotel Booking - Business Auxiliary Service - whether a service is a tour operator service or otherwise, that is if the permit of the vehicle is contract carriage permit issued under Section 2(43) of Motor Vehicle Act, 1988 and as per the said Section the specification of the vehicles must be in terms of Rule 128 of Central Motor Vehicle Rules 1989? - Held that - in order to classify the service under Tour Operator , it is necessary that the vehicle should be tourist vehicle in terms of Section 2(43) of the Motor Vehicle Act, 1988 read with Rule 128 of the Central Motor Vehicles Rule 1989. From the orders of both the lower authority, it is observed that they have not verified and given any finding on this vital aspect, therefore the matter needs to be reconsidered by the appellate authority. On the issue of quantification of demand on the ground raised by the appellant that they have not provided the tour operator service during the period 2000-01 and 2001-02 and the tax liability if any arise, it must be limited for the period 2002-03 and 2003-04 which comes to ₹ 1,12,046/-. On this issue though the appellant have made a categorical submission and the same was recorded by the Ld. Commissioner, but no finding was given, therefore this issue also needs reconsideration - the impugned order set aside and the matter remanded to the Commissioner (Appeals) for reconsideration of the entire matter taking into consideration our above observations - appeal allowed - matter remanded.

Issues Involved:
1. Classification of services provided by the appellant under "Tour Operator" and "Business Auxiliary Services."
2. Non-payment of service tax and non-filing of returns by the appellant.
3. Validity of the demand for service tax, penalty, and interest under various sections of the Finance Act, 1994.
4. Applicability of the definition of "Tour Operator" and "Tourist Vehicle" under the Motor Vehicles Act, 1988 and Central Motor Vehicle Rules, 1989.
5. Quantification of the demand for service tax for specific financial years.

Issue-wise Detailed Analysis:

1. Classification of Services:
The appellant was engaged in providing services categorized under "Tour Operator" and "Business Auxiliary Services" but did not obtain registration or pay service tax for these services. The lower authorities classified the appellant's bus services between Pune and Sahar Airport as "Tour Operator" services based on the definition provided under Section 65(115) of the Finance Act, 1994. The appellant contended that their operation as a stage carriage should not fall under "Tour Operator" services.

2. Non-payment of Service Tax and Non-filing of Returns:
During a departmental survey, it was observed that the appellant neither paid service tax nor filed returns from April 2000 to September 2003. This led to the issuance of a show cause notice demanding service tax under Section 73(1), along with penalties and interest under Sections 75, 76, 77, and 78 of the Finance Act, 1994. The adjudicating authority confirmed these demands, and the Commissioner (Appeals) upheld the decision.

3. Validity of the Demand for Service Tax, Penalty, and Interest:
The appellant argued that their buses were operating under a contract carriage permit and did not meet the specifications of a "Tourist Vehicle" as per Rule 128 of the Central Motor Vehicle Rules, 1989. The Commissioner (Appeals) relied on the judgment of the Hon'ble Madras High Court in the case of Sri Pandyan Travels, which stated that a contract carriage vehicle could be considered a "Tourist Vehicle" if it met the specifications under Rule 128.

4. Applicability of Definitions under Motor Vehicles Act and Rules:
The Tribunal emphasized that for a service to be classified as "Tour Operator," the vehicle must be a "Tourist Vehicle" as defined under Section 2(43) of the Motor Vehicles Act, 1988, and must conform to the specifications under Rule 128 of the Central Motor Vehicle Rules, 1989. The Tribunal referred to several judgments, including Jai Somnath Transport and Maharashtra State Road Transport Corpn. Ltd., which supported the view that the vehicle must meet specific criteria to be considered a "Tourist Vehicle."

5. Quantification of Demand for Specific Financial Years:
The appellant claimed that no tours were conducted during the financial years 2000-01 and 2001-02, and any tax liability should be limited to the period 2002-03 and 2003-04, amounting to ?1,12,046/-. The Commissioner (Appeals) did not address this claim, necessitating a reconsideration of the demand quantification.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter to the Commissioner (Appeals) for reconsideration, emphasizing the need to verify whether the appellant's vehicles met the specifications of a "Tourist Vehicle" under Rule 128 and to address the quantification of the demand for specific financial years. The appeal was allowed by way of remand, with instructions to reconsider the entire matter based on the Tribunal's observations.

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