Tour operator service scope excludes ordinary contract carriages not registered or equipped as tourist vehicles

Operation of tours in ordinary contract carriages was not covered by the charging definition of "tour operator" because the statutory scheme applied only where the operator used a tourist vehicle within the meaning of the Motor Vehicles Act and the prescribed rules. The buses in question were ordinary buses, were not registered as tourist vehicles, and did not meet the Rule 128 specifications for such vehicles. On that basis, the activity fell outside the scope of tour operator's service under the Finance Act, 1994, and the service tax demand was not sustainable.

---

---

Issues: Whether buses used for transporting employees in ordinary contract carriages, not registered or equipped as tourist vehicles, were taxable as tour operator's service under the Finance Act, 1994.

Analysis: During the relevant period, tour operator's service covered service provided by a tour operator in relation to a tour. The statutory definition of "tour operator" applied only to a person engaged in operating a tour in a tourist vehicle, and "tourist vehicle" took its meaning from Section 2(43) of the Motor Vehicles Act, 1988. That meaning required a contract carriage to be constructed, adapted, equipped and maintained according to the specifications prescribed, which were set out in Rule 128 of the Central Motor Vehicles Rules, 1988. The unchallenged finding was that the buses used by the respondent were ordinary buses, were not registered as tourist vehicles, and did not satisfy Rule 128 specifications. On that statutory framework, operation of tours in ordinary contract carriages did not fall within the charging definition.

Conclusion: The respondent's activity was not covered by the definition of "tour operator", and the service tax demand was not sustainable.

---