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of <h1>Tribunal upholds service tax demand on tour operator, penalties set aside</h1> <h3>HEENA TOURS AND TRAVELS Versus COMMISSIONER OF CENTRAL EXCISE</h3> HEENA TOURS AND TRAVELS Versus COMMISSIONER OF CENTRAL EXCISE - 2015 (39) S.T.R. 132 (Tri. - Mumbai) Issues:1. Challenge of demand of service tax as a tour operator service for the period 2000-02.2. Interpretation of the definition of 'tour operator' under Sections 65(105) and 65(52) of the Finance Act.3. Liability for service tax based on operating tours in tourist vehicles covered by permits under the Motor Vehicles Act.4. Applicability of Board circular dated 27.4.2000 and the decision of the Hon'ble Madras High Court.5. Confirmation of demand on the grounds of providing tour operator service.6. Penalty imposition based on the exemption under Notification No.52/98-ST and the provisions of Section 80 of the Finance Act.Analysis:1. The appellants contested the demand of service tax, arguing they are not tour operators as they do not own tourist vehicles but only organize tours. They relied on the definition of 'tour operator' under the Finance Act and a Board circular to support their claim. The Revenue, however, asserted that the appellants, by organizing tours using hired tourist vehicles, fall under the definition of a tour operator and are liable for service tax. The Revenue cited a decision of the Madras High Court to support their position.2. The definition of 'tour operator' under Section 65(52) of the Finance Act during the disputed period required engagement in the business of operating tours in tourist vehicles covered by permits under the Motor Vehicles Act. The Tribunal found that since the appellants organized tours using hired tourist vehicles, they were indeed engaged in the business of operating tours in tourist vehicles, thus justifying the demand for service tax.3. Regarding penalties, the appellants argued that they believed tour operator services were exempt from service tax based on a prior Notification, and therefore, there was no intention to evade payment. The Tribunal noted that the service of a tour operator became taxable from a certain date, with exemptions in place until a subsequent amendment. Citing Section 80 of the Finance Act, the Tribunal concluded that the appellants had a reasonable cause for their failure to pay service tax during the disputed period and thus set aside the penalties imposed.4. In conclusion, the Tribunal upheld the demand for service tax on the appellants as they were deemed to be providing tour operator services based on their activities. However, the penalties imposed were overturned based on the reasonable cause established by the appellants under Section 80 of the Finance Act.
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