Appellants exempt from service tax on contract carriage operations transporting passengers between cities.

The Tribunal ruled in favor of the appellants in a case concerning liability for service tax on contract carriage operations for transporting passengers between cities. The Tribunal found that the appellants, operating under a contract carriage permit, were exempt from service tax under a government notification with retrospective effect from 01.04.2000. As the appellants had operated contract carriages for inter-State or intra-State passenger transportation, the service tax demand and penalty imposed by the Department were set aside, and the appeal was allowed on 07.11.2014.

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Issues:
1. Liability for service tax on contract carriage operations for carrying passengers between cities.

Analysis:
The appeal in question arose from an Order-in-Appeals dated 30.09.2005, where the Department demanded service tax from the appellants for operating transportation of passengers under a contract carriage permit. The demand amount was &8377; 12,60,129/- for the period 01.04.02 to 31.03.04, along with an imposed penalty, which was upheld by the Commissioner (Appeals).

The key issue to be determined in this case was whether the appellants were liable for service tax for their contract carriage operations transporting passengers between cities. The Government had exempted contract carriage permit operators under tour operator service from service tax through Notification No. 20/2009-ST dated 07.07.2009, with retrospective effect from 01.04.2000. The Finance Act, 2011, introduced a retrospective amendment validating this exemption.

The Tribunal noted that the appellants had indeed operated contract carriages for carrying passengers between specific points, as evidenced by tickets issued to individual passengers showing destinations like Coimbatore to Chennai, Coimbatore to Ernakulam, and Coimbatore to Pondicherry. Therefore, considering the retrospective exemption granted by the Government from 01.04.2000, the service provided by the appellants as a tour operator with a contract carriage permit for inter-State or intra-State passenger transportation was exempt from service tax.

Consequently, the Tribunal set aside the impugned order demanding service tax and penalty, allowing the appeal in favor of the appellants. The operative part of the Order was pronounced in the Open Court on 07.11.2014.

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