Outbound tour activity outside tour operator service, with tax, interest and penalties not sustainable on the Tribunal's view.

Outbound tour activity was treated as outside the scope of "tour operator" service under Section 65(115) of the Finance Act, 1994, as construed by the Tribunal, because the composite service was operated by a mode of transport not covered by the Motor Vehicles Act, 1988. The Tribunal also accepted that service tax could not be levied on services provided and consumed beyond Indian territory in such outbound tour activity. On that basis, the confirmed demand of service tax, interest and penalties could not survive, and relief was granted to the assessee.

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Issues: Whether outbound tours fell within the scope of "tour operator" service and whether the confirmed demand of service tax, interest and penalties could survive.

Analysis: The issue was treated as settled by the Tribunal's earlier decision involving the same assessee. The definition of "tour operator" under Section 65(115) of the Finance Act, 1994 was construed in a manner that excluded the composite activity of operating outbound tours by a mode of transport other than a tourist vehicle covered by the Motor Vehicles Act, 1988. The Tribunal also accepted that service tax could not be levied on services provided and consumed beyond the Indian territory in such outbound tour activity. In consequence, the demand, interest and penalties confirmed on the premise of taxable tour operator service could not be sustained in the present appeals.

Conclusion: The outbound tour activity was held not liable to service tax on the facts of the case, and the impugned order confirming demand, interest and penalties was set aside.

Final Conclusion: The appeals succeeded and the assessee obtained relief from the service tax demand and the connected penal consequences.

Ratio Decidendi: A composite outbound tour activity, when provided and consumed beyond India and outside the statutory contours of tour operator service as construed by the Tribunal, does not attract service tax under Section 65(115) of the Finance Act, 1994, and consequential penalties cannot survive.

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