Tour operator service applies only to statutory tourist vehicles; stage carriage permits defeated the tax demand and related penalty.

Service tax as a tour operator applied only where tours were operated in a vehicle that legally qualified as a tourist vehicle under the motor vehicle law and met the prescribed statutory specifications. The assessee's vehicles were described in the permit as stage carriages, and the record did not show compliance with tourist-vehicle requirements, so the tour operator demand and related penalty were set aside. The mandap keeper demand was not disputed and was sustained, but the penalty was reduced to a nominal amount. The issue relating to business auxiliary service was left open for the adjudicating authority.

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Issues: (i) Whether the appellant's vehicles could be treated as tourist vehicles so as to fall within the taxable category of tour operator service; (ii) whether the penalty and the demand relatable to mandap keeper service warranted interference.

Issue (i): Whether the appellant's vehicles could be treated as tourist vehicles so as to fall within the taxable category of tour operator service.

Analysis: Liability under tour operator service depended on whether the vehicles were tourist vehicles within the meaning of the Finance Act read with the Motor Vehicles law. The permit issued to the appellant described the vehicles as stage carriages, and the record did not show that they satisfied the specifications required for a tourist vehicle. The reasoning applied the settled principle that a person is a tour operator only when operating tours in a tourist vehicle conforming to the statutory requirements.

Conclusion: The demand of service tax under the category of tour operator was set aside in favour of the assessee, and the connected penalty to that extent also failed.

Issue (ii): Whether the penalty and the demand relatable to mandap keeper service warranted interference.

Analysis: The assessee did not dispute the substantive demand under mandap keeper service. The only interference made was on the quantum of penalty, which was reduced having regard to the smallness of the amount involved.

Conclusion: The mandap keeper demand was sustained, while the penalty was reduced to a nominal amount.

Final Conclusion: The appeal succeeded substantially on the tour operator classification and consequential penalty, while the undisputed mandap keeper demand remained intact with reduced penalty; the issue relating to business auxiliary service was left open for decision by the adjudicating authority.

Ratio Decidendi: Service tax as a tour operator can be levied only where the assessee operates tours in a vehicle that legally qualifies as a tourist vehicle under the motor vehicle law and satisfies the prescribed statutory specifications.

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