Tour operator classification fails where only vehicle renting is shown and no tour planning or arranging is proved.

A person merely renting out buses, without evidence of planning, scheduling, organising or arranging tours, cannot be classified as a tour operator for service tax purposes. The relevant definition of tour operator also changed during the period in question: for the earlier period, liability attached to operating tours in a tourist vehicle covered by a permit under the Motor Vehicles Act, 1988; for the later period, it extended to persons planning or arranging tours by any mode of transport. On the record, the assessee only hired out vehicles, so the department's taxable classification was not made out. The service tax demand and penalties were therefore unsustainable.

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Issues: Whether the assessee, which only rented out buses and was not shown to be engaged in planning, scheduling, organising or arranging tours, could be treated as a tour operator for the purpose of service tax under the Finance Act, 1994.

Analysis: The relevant definition of tour operator changed during the period in question. For the earlier part, liability attached only to a person engaged in operating tours in a tourist vehicle covered by a permit under the Motor Vehicles Act, 1988. For the later part, the definition extended to persons engaged in planning, scheduling, organising or arranging tours by any mode of transport, while still including operators of tours in a tourist vehicle. The record showed that the assessee was merely renting vehicles. There was no material to show that it was engaged in the business of planning, scheduling, organising or arranging tours. On that basis, the vehicles operated by the assessee could not be brought within the taxable category alleged by the department.

Conclusion: The assessee was not liable to be treated as a tour operator on the facts of the case, and the service tax demands were unsustainable. The penalties also did not survive.

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