Contract carriage operators treated as tour operators for service tax purposes; liability upheld under the Finance Act, 1994.

Contract carriage operators were treated as falling within the service tax net as tour operators under the Finance Act, 1994 when the vehicles were used for tours. The Court relied on the earlier Division Bench ruling that contract carriage operators were covered by the statutory definition, except for the limited category of spare buses. On that basis, the petitioner was held liable to pay service tax and the challenge to the demand failed.

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Issues: Whether a contract carriage operator was covered as a tour operator liable to service tax under the Finance Act, 1994.

Analysis: The operative legal question was whether the nature of the vehicle and permits held by the operator excluded it from the service tax net. The Court applied the earlier Division Bench ruling, which had held that contract carriage operators were within the scope of the service tax provisions, except for the limited category of spare buses. It noted that the petitioner was a contract carriage operator and that the reasoning in the earlier judgment treated such vehicles, when used for tours, as falling within the statutory definition attracting service tax.

Conclusion: The petitioner was held liable to pay service tax and the challenge to the demand failed.

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