Tour operator tax applies only to statutory tourist vehicles; stage-carriage contract operations remained outside the tax net.

Stage-carriage buses used for chartered, contract and special permit operations did not fall within "tour operator" service for the period before 10-09-2004 because the then definition applied only to operators of tours in tourist vehicles covered by the Motor Vehicles Act, and these buses were not shown to meet the required specifications. The post-10-09-2004 and 16-05-2008 amendments also did not bring the activity into tax net, as the assessee was supplying vehicles on demand under contract-like arrangements rather than organising package tours or operating statutorily covered tourist vehicles. Service tax demand on these operations was therefore unsustainable.

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Issues: (i) Whether the assessee's stage-carriage based chartered, contract and special permit services were taxable as "tour operator" service for the period prior to 10-09-2004. (ii) Whether the amended definition of "tour operator" with effect from 10-09-2004 and later amendment from 16-05-2008 brought the assessee's activities within tax net.

Issue (i): Whether the assessee's stage-carriage based chartered, contract and special permit services were taxable as "tour operator" service for the period prior to 10-09-2004.

Analysis: The definition then in force covered only a person engaged in operating tours in a tourist vehicle covered by a permit under the Motor Vehicles Act, 1988. A tourist vehicle is a contract carriage answering the prescribed specifications, and a contract carriage is one used under a contract and not merely a stage carriage operating on temporary or special permits. The assessee's buses were stage-carriage vehicles operating on temporary contract carriage or special permits and were not shown to conform to the specifications required to become tourist vehicles or contract carriages.

Conclusion: The assessee's activities were not taxable as tour operator service for the period prior to 10-09-2004, in favour of the assessee.

Issue (ii): Whether the amended definition of "tour operator" with effect from 10-09-2004 and later amendment from 16-05-2008 brought the assessee's activities within tax net.

Analysis: The later definition extended to planning, scheduling, organizing or arranging tours by any mode of transport, but the legislative expansion was directed principally to package tours and similar organised travel arrangements. The assessee was found to be supplying vehicles on demand under contract carriage type arrangements and not conducting package tours or operating tourist vehicles within the amended statutory sense. The 16-05-2008 amendment also did not alter this position because the assessee's vehicles remained stage-carriage vehicles and were not covered by the statutory description of tourist vehicles or contract carriages contemplated by the provision.

Conclusion: The assessee's activities were not taxable as tour operator service for the post-10-09-2004 period as well, in favour of the assessee.

Final Conclusion: The service tax demands could not be sustained on the assessee's chartered, contract and special permit bus operations, and the assessee succeeded while the departmental challenge to the dropped demand failed.

Ratio Decidendi: For levy as a tour operator, the service must fall within the statutory description applicable to the relevant period, and stage-carriage vehicles operating on temporary or special permits do not become taxable tourist vehicles or contract carriages merely because they are used for contract-based passenger transport.

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