2006 (4) TMI 23 - AT - Service Tax

Service Tax - Tour Operator - For registration in the category of tourist vehicles, vehicle has to satisfy the specification laid down in Rule 128 read with Section 2(43) of Motor Vehicles Act hence, assessee not required to be registered in category of Tour operator - Demand not confirmed

Summary

Issues:
Challenge to revision order on service tax liability and penalty imposition for not being registered as a Tour Operator. Lack of quantification in show cause notices. Interpretation of vehicle specifications for Tour Operator registration under Rule 128 of Motor Vehicles Rules.

Analysis:
1. The appellants contested the revision order by the Commissioner of Central Excise, challenging the categorization as Tour Operator and imposition of service tax under Section 65(78) of the Finance Act, along with a penalty. The dispute arose from a Show Cause Notice in 2002, dropped later, and another in 2005. Both notices lacked quantification of demand and service tax, a crucial flaw pointed out by the appellants.

2. The appellants argued that they were not Tour Operators but registered as contract vehicles under Rule 128 of Motor Vehicles Rules, 1989, and Section 2(43) of Motor Vehicles Act, 1988. They cited a Madras High Court judgment emphasizing the necessity for tourist vehicles to meet specific criteria outlined in Rule 128. The Commissioner's decision was solely based on the appellants being registered as a contract vehicle, ignoring the vehicle's failure to meet tourist vehicle specifications.

3. The appellants' counsel highlighted the discrepancy in vehicle specifications required for Tour Operator registration under Rule 128. Citing precedents like Bayer Diagnostics India Ltd. v. CCE, Vadodara and Coolade Beverages Ltd. v. CCE, Meerut, the counsel argued that demands must be specified in show cause notices to be valid. Reference was made to the Mumbai Bench ruling in Transpek Inds. Ltd. v. CCE, Vadodara, supporting the necessity of quantification in show cause notices.

4. The JDR defended the Commissioner's decision, asserting the demands were rightly confirmed, and the authorities were directed to quantify the amounts. However, the JDR's argument was countered by the appellants' counsel, emphasizing the legal requirement for demands to be specified and raised in show cause notices.

5. The Tribunal ruled in favor of the appellants, noting the failure to specify the period of demand and quantify service tax in the show cause notices. Upholding the appellants' argument regarding vehicle specifications under Rule 128 of Motor Vehicles Rules and Section 2(43) of Motor Vehicles Act, the Tribunal concluded that the appellants were not obligated to register as Tour Operators. The impugned order was set aside, allowing the appeal with any consequential relief.