2007 (2) TMI 57 - AT - Service Tax

Court rules vehicles not tourist vehicles under Motor Vehicles Act, upholds Order-in-Appeal.

The High Court dismissed the Revenue's appeal challenging the Order-in-Appeal that certain vehicles operated by the respondent did not qualify as tourist ... Tourist vehicle as defined in Section 2(43) of the Motor Vehicles Act read with Rule 128 of the Central Motor Vehicles Rules, 1989 - tour operator under Section 65(52) of the Finance Act, 1994 - contract carriage - tourist permit under Section 88(9) of the Motor Vehicles ActTourist vehicle as defined in Section 2(43) of the Motor Vehicles Act read with Rule 128 of the Central Motor Vehicles Rules, 1989 - tour operator under Section 65(52) of the Finance Act, 1994 - contract carriage - Whether the four vehicles operated by the respondent fall within the definition of 'tourist vehicle' and hence their operations are taxable as services of a 'tour operator'. - HELD THAT: - Section 2(43) of the Motor Vehicles Act defines 'tourist vehicle' as a contract carriage constructed, adapted and equipped in accordance with specifications prescribed by Rule 128 of the Central Motor Vehicles Rules; compliance with those specifications is a prerequisite for registration as a tourist vehicle. The respondent produced certificates from the State Transport Authority showing the four vehicles were registered as contract carriages under Section 2(7) but not as 'tourist vehicle' under Section 2(43). The Revenue did not produce any contrary evidence to show that the vehicles met the Rule 128 specifications or were registered as tourist vehicles. The Court noted the High Court of Madras authority which holds that to qualify as a 'tour operator' under Section 65(52) of the Finance Act the business must operate tours in 'tourist vehicles' as defined by Section 2(43) read with Rule 128; the other cited Madras decision likewise turns on possession of tourist permits issued under Section 88(9) linked to vehicles answering the description of 'tourist vehicle'. Applying these principles to the evidence, the four vehicles do not satisfy the statutory and regulatory description of 'tourist vehicle', and therefore operations by those vehicles do not fall within the 'tour operator' service category for levy of service tax. [Paras 5, 6, 7, 8, 9]The four vehicles are not 'tourist vehicles' as envisaged by Section 2(43) read with Rule 128 and consequently their operations are not covered by the 'tour operator' service; the Commissioner (Appeals) order is upheld.Final Conclusion: The Tribunal dismisses the Revenue appeal, holding that the four vehicles were not tourist vehicles under Section 2(43)/Rule 128 and therefore the operations are not taxable as services of a tour operator under Section 65(52) of the Finance Act; the Commissioner (Appeals) order is affirmed. Issues:Applicability of Service Tax under 'Tour Operator' category to vehicles operated by the respondent.Analysis:The appeal filed by the Revenue challenges the Order-in-Appeal which held that certain vehicles operated by the respondent do not qualify as tourist vehicles under the 'Tour Operator' category. The Revenue argues that the vehicles are 'contract carriages' engaged in tour operations, citing relevant case law. On the other hand, the respondents contend that the vehicles were not registered as tourist vehicles and do not meet the criteria under the Motor Vehicles Act and Central Motor Vehicles Rules. The primary issue is whether the vehicles in question meet the definition of a 'tourist vehicle' as per the legal provisions.The Motor Vehicles Act defines a 'tourist vehicle' as a contract carriage meeting specific specifications outlined in the Central Motor Vehicles Rules. The Commissioner (Appeals) based the decision on the evidence provided by the respondent, showing that the vehicles were certified as contract carriages but not as tourist vehicles. The Revenue failed to present contrary evidence. The judgment of the High Court of Madras emphasizes that for a person to be considered a tour operator, they must operate a tourist vehicle in accordance with the Motor Vehicles Act and Central Motor Vehicle Rules. The evidence indicates that the respondent's vehicles do not qualify as 'tourist vehicles' as required by law.Another judgment cited supports the respondent's case, stating that tourist permits are issued to operators with tourist vehicles in alignment with the Motor Vehicles Act and relevant rules. Since the respondent's vehicles were not operated as 'tourist vehicles' as defined by the law, the Commissioner (Appeals) correctly granted relief to the respondents. The judgment concludes that the appeal by the Revenue is dismissed, affirming the correctness of the Commissioner (Appeals) order based on the legal requirements for tour operators and tourist vehicles.