2007 (4) TMI 80 - AT - Service Tax

Service Tax on Taxi Drivers in Co-operative Society Overturned

The Tribunal set aside the imposition of Service Tax on taxi drivers under a Co-operative Society classified as 'tour operators.' The decision highlighted ... Definition of 'Tour Operator' - Levy of Service Tax on taxi services - Collection of Service Tax by cooperative societyDefinition of 'Tour Operator' - Levy of Service Tax on taxi services - Collection of Service Tax by cooperative society - Whether taxi drivers plying between the airport and passengers' destinations, and the cooperative society of such drivers, fall within the definition of 'tour operator' and are liable to Service Tax or for collection of Service Tax by the society. - HELD THAT: - The Tribunal found that the Revenue did not produce any evidence showing that the appellant cooperative collected taxi fares from passengers as a 'tour operator' service. The individual taxi owners independently receive fares and ply between the airport and passengers' destinations; they have not undertaken or operated 'tours' as contemplated by the statutory definition. The definition of 'Tour Operator' requires operation of tours in a tourist vehicle covered by the requisite permit; mere airport-to-destination taxi trips by individual owners do not constitute operating tours in a tourist vehicle. In the absence of proof that the society acted as a tour operator or collected fares in that capacity, the imposition of Service Tax on the taxi drivers or the direction that the society collect Service Tax is unjustified. [Paras 4]The impugned order directing collection of Service Tax from drivers through the cooperative on the ground that they are 'tour operators' is set aside and the appeal is allowed.Final Conclusion: Appeal allowed: direction that the cooperative society collect Service Tax from individual taxi drivers as 'tour operators' quashed for lack of evidence and because airport-to-destination taxi trips by individual owners do not fall within the statutory definition of 'tour operator'. Issues:Interpretation of 'tour operator' for levy of Service Tax on taxi drivers under a Co-operative Society.Analysis:The appeal in question concerns the imposition of Service Tax on taxi drivers under a Co-operative Society, categorized as 'tour operators.' The Counsel argues that individual drivers, not the Society, receive taxi fares, and thus, the Society should not be liable for Service Tax. Citing the Usha Breco Ltd. case, it is contended that the statutory definition of 'tour' should not be artificially interpreted. The Tribunal's decision in the Usha Breco case, involving ropeway services, supports this argument by setting aside the levy of Service Tax. The JDR asserts that since the Co-operative Society comprises all drivers, they fall under the 'tour operator' definition, justifying the tax levy.Upon careful review, it is noted that the Revenue failed to provide evidence of the Society collecting taxi fares for 'tour operator' services. The appellants demonstrated that individual taxi owners independently operate taxis from the Airport to customers' destinations, not constituting 'tour operator' services. The legal definition of 'tour operator' under Section 65 specifies engagement in operating tours in tourist vehicles. Consequently, taxi drivers transporting passengers from the Airport to destinations do not qualify as tour operators. Therefore, the imposition of Service Tax on drivers associated with the Co-operative Society is deemed unjustified. The impugned order is set aside, and the appeal is allowed.This judgment underscores the critical distinction between individual taxi operations and 'tour operator' services under the law. The decision clarifies the legal interpretation of 'tour operator' for the purpose of levying Service Tax on taxi drivers associated with a Co-operative Society. It emphasizes the necessity of meeting the specific criteria outlined in the statutory definition to determine the applicability of Service Tax.