Retrospective service tax exemption for contract carriage bus operations bars demand for the covered period.

Service tax on inter-State and intra-State bus plying under a contract carriage permit was not sustainable for the period 1-4-2000 to 31-3-2004 because the activity fell within the exemption for tour operators plying buses from point to point. The exemption was given retrospective effect from 1-4-2000 by the Finance Act, 2011, so the demand related to a period covered by that retrospective exemption and could not be recovered.

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Issues: Whether service tax demand on inter-State and intra-State bus plying under a contract carriage permit for the period 1-4-2000 to 31-3-2004 survived in view of retrospective exemption granted by notification and the Finance Act, 2011.

Analysis: The activity was covered by the exemption notified for tour operators plying buses from point to point, and retrospective effect was given to the exemption with effect from 1-4-2000 by the Finance Act, 2011. Since the demand related to a period within that retrospective coverage, the taxable levy could not be sustained.

Conclusion: The service tax demand was held not recoverable for the relevant period and the appeal was allowed.

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