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Issues: (i) Whether the assessees, engaged in transporting passengers by buses under tourist permits and contract carriage permits, fell within the definition of "tour operator" and were liable to service tax under Section 65(105)(n) of the Finance Act, 1994; (ii) Whether the assessees were entitled to consider exemption under Notification No. 20/2009-ST dated 07/07/2009 with retrospective effect, and whether the connected questions of limitation, valuation and penalty required fresh adjudication.
Issue (i): Whether the assessees, engaged in transporting passengers by buses under tourist permits and contract carriage permits, fell within the definition of "tour operator" and were liable to service tax under Section 65(105)(n) of the Finance Act, 1994.
Analysis: The definition of "tour operator" under Section 65 of the Finance Act, 1994 was construed to cover persons operating tours in tourist vehicles and, from 10/09/2004 onward, persons planning, scheduling, organizing or arranging tours by any mode of transport. The buses were operated on predetermined routes and scheduled timings for transportation of passengers from one place to another, which brought the activity within the statutory meaning of "tour". The assessees therefore fell within the ambit of "tour operator" under the provision as it stood from time to time.
Conclusion: The activity was taxable under Section 65(105)(n) of the Finance Act, 1994 and the challenge to taxability failed.
Issue (ii): Whether the assessees were entitled to consider exemption under Notification No. 20/2009-ST dated 07/07/2009 with retrospective effect, and whether the connected questions of limitation, valuation and penalty required fresh adjudication.
Analysis: The retrospective exemption granted for transport services by tour operators having contract carriage or tourist vehicle permits required examination by the adjudicating authorities. The objections regarding limitation, suppression, valuation of taxable value, inclusion of stage carriage income, luggage and parcel charges, and penal liability also needed reconsideration on the facts. As these matters had not been finally adjudicated in the manner required, the demands were set aside for fresh decision on those aspects.
Conclusion: The claims on exemption and the connected issues were remanded for fresh consideration by the adjudicating authorities.
Final Conclusion: The taxability of the assessees' activities was affirmed, but the demands were sent back for reconsideration of exemption and all consequential issues, including valuation, limitation and penalty.
Ratio Decidendi: Transport of passengers by buses under tourist vehicle or contract carriage permits on scheduled routes can fall within "tour operator" service under Section 65(105)(n) of the Finance Act, 1994, while claims to retrospective exemption and consequential matters must be independently examined on remand where warranted.
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