2017 (11) TMI 1042 - HC - Service Tax

Tour operator service - petitioner s contention is that the petitioner s vehicle, which is a contract carriage does not satisfy the ingredients of tourists vehicle, and the demand made by the respondent is illegal - Held that - the interpretation sought to be given to the observations of the Court does not, in any manner, advance the case of the petitioner. The rationale applicable to Stage Carriage Permits would equally apply to Contract Carriage vehicles covered by the permit under Section 74 of the Motor Vehicles Act - the respondent was bound to consider the specific plea raised by the petitioner that, he is not a tour operator, undertaking tour in respect of a tourist vehicle, as contemplated under Section 2 (43) of the Act read with Section Rule 85 (A) (7) of the Motor Vehicles Act and Rule 128 of the Central Motor Vehicle Rules - for consideration of this plea the matter has to be remanded to the respondent for fresh consideration - petition allowed by way of remand.

Issues Involved:
1. Applicability of service tax to the petitioner’s vehicle.
2. Compliance with the directions issued by the Court in previous writ petitions.
3. Definition and classification of the petitioner’s vehicle under the Motor Vehicles Act and the Finance Act.
4. Consideration of objections raised by the petitioner regarding the classification of his vehicle.

Detailed Analysis:

1. Applicability of Service Tax to the Petitioner’s Vehicle:
The petitioner, a contract carriage operator, was issued a contract carriage permit and has been operating his vehicle in the Union Territory of Pondicherry. The Central Excise Commissionerate issued a circular mandating tour operators to register for service tax. The petitioner contended that his vehicle did not meet the conditions stipulated in the circular, and thus, service tax was not applicable. However, the respondent issued a notice requiring the petitioner to register as a tour operator under Section 65 (52) of the Finance Act, 1994.

2. Compliance with Directions Issued by the Court in Previous Writ Petitions:
The petitioner argued that the impugned order violated the directions issued by the Court in W.P.Nos.1358 and 1359 of 2004. The respondent was accused of failing to recognize that the petitioner held only a contract carriage permit under Section 2(7) of the Motor Vehicles Act, 1988, which did not satisfy the requirements of Section 2 (43) of the Act and Rule 85 (A) (7) of the Central Motor Vehicles Rules defining a "Tourist Vehicle."

3. Definition and Classification of the Petitioner’s Vehicle:
The petitioner maintained that his vehicle did not qualify as a tourist vehicle under Sections 65 (51) and (52) of the Finance Act. Referring to a previous decision (The Secretary, Federation Bus Operators Association vs. Union of India), the petitioner argued that the impugned demand was illegal. The respondent countered by citing a decision (Shi. Pandyan Travels vs. The Commissioner of Central Excise) that supported the Revenue’s stance, asserting that the petitioner must register under the Finance Act.

4. Consideration of Objections Raised by the Petitioner:
The Court noted that in the case of The Secretary Federation of Bus Operators, objections raised by contract carriage operators regarding their classification were to be considered by the concerned authorities. The petitioner had raised specific objections, stating that he was not undertaking tours with a tourist vehicle as defined under Section 2 (43) of the Motor Vehicles Act. The respondent had not adequately considered these objections in the impugned order.

Conclusion:
The Court concluded that the respondent was required to consider the petitioner’s specific plea that his vehicle was not a tourist vehicle as contemplated under the relevant sections of the Motor Vehicles Act and the Central Motor Vehicle Rules. The matter was remanded to the respondent for fresh consideration, directing them to assess whether the petitioner’s vehicle qualified as a tourist vehicle, which is a sine qua non for the application of the Finance Act. The respondent was instructed to provide a personal hearing to the petitioner’s authorized representative and decide the matter on its merits in accordance with the law. The writ petition was allowed, and the impugned order was set aside.

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