Tour operator service classification fails for employee transport in contract carriages under the relevant statutory definitions.

Transportation of employees in contract carriages was not taxable as 'tour operator' service for either period. Before 10.09.2004, the definition applied only where the vehicle was a 'tourist vehicle' under the Motor Vehicles Act and Rules, and the employee-transport vehicles did not satisfy that requirement. After the amendment, the definition extended to persons planning, scheduling, organizing or arranging tours, but supplying vehicles on fixed contractual terms for pre-determined employee routes and timings was not such tour activity. The demand was therefore not sustainable.

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Issues: Whether the transportation of employees in contract carriages was classifiable as 'tour operator' service for the period prior to 10.09.2004 and after the amendment from 10.09.2004.

Analysis: For the earlier period, liability depended on the vehicle answering the description of a 'tourist vehicle' under Section 2(43) of the Motor Vehicles Act, 1988 read with Rule 128 of the Motor Vehicles Rules, 1989, because the then definition of 'tour operator' under Section 65(115) of the Finance Act, 1994 was confined to operating tours in such vehicles. The vehicles used for employee transport did not satisfy that requirement. For the later period, the expanded definition under Section 65(115) of the Finance Act, 1994 covered persons engaged in planning, scheduling, organizing or arranging tours, but the appellant only supplied vehicles on fixed contractual terms for transportation of employees on pre-determined routes and timings. Such activity did not amount to planning or arranging tours, and the vehicles were still not tourist vehicles.

Conclusion: The transportation activity was not covered by 'tour operator' service either before or after 10.09.2004, and the demand could not be sustained.

Ratio Decidendi: For service tax under the 'tour operator' entry, the activity must fall within the statutory definition applicable to the relevant period, and employee transportation by contract carriage is not taxable unless the vehicle is a tourist vehicle under the Motor Vehicles law or the activity itself amounts to planning or arranging tours.

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