Tour operator service tax scope widened as permit-based vehicle use and amended definitions reduced the need for Rule 128 compliance.

The commentary explains that, for service tax purposes, the definition of "tour operator" was treated as broader under the amended Section 65(115) than under the earlier Section 65(52). For the earlier period, prima facie coverage depended on operation of the vehicle under a permit issued under the Motor Vehicles Act, and not necessarily on compliance with Rule 128 specifications and comfort standards. For the post-October 2004 period, the phrase "any mode of transport" was read as dispensing with a specific vehicle-specification requirement. On waiver of pre-deposit, unsupported pleas of limitation and financial hardship were rejected, and only partial interim relief was granted subject to reduced pre-deposit.

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Issues: (i) whether the appellants had made out a prima facie case that the vehicles used in the tours were not "tourist vehicles" for the purpose of levy under the relevant definition of "tour operator"; (ii) whether the pleas of limitation and financial hardship justified waiver of pre-deposit.

Issue (i): whether the appellants had made out a prima facie case that the vehicles used in the tours were not "tourist vehicles" for the purpose of levy under the relevant definition of "tour operator".

Analysis: The amended definition of "tour operator" under Section 65(115) of the Finance Act, 1994 was treated as broader than the earlier definition under Section 65(52) of the Finance Act, 1994. For the earlier period, the order recorded that it was not necessary, prima facie, that the vehicle must satisfy the specifications and comfort levels in Rule 128 of the Central Motor Vehicles Rules, but only that it be operated under a permit granted by the motor vehicle authority under the Motor Vehicles Act. For the post-October 2004 period, the expression "any mode of transport" in Section 65(115) was relied on to indicate that conformity to specific vehicle specifications was not mandatory.

Conclusion: The appellants did not establish a prima facie case on classification, and the challenge to the service tax demand was not accepted for waiver purposes.

Issue (ii): whether the pleas of limitation and financial hardship justified waiver of pre-deposit.

Analysis: The order noted that the materials said to support limitation were not produced, and the claim of financial hardship was unsupported by evidence. On that basis, no sufficient ground was found to waive pre-deposit on those pleas.

Conclusion: The pleas of limitation and financial hardship were rejected for the purpose of waiver of pre-deposit.

Final Conclusion: Partial interim relief was granted only by permitting pre-deposit of a reduced sum, with waiver of the balance upon compliance, while the request for complete waiver was declined.

Ratio Decidendi: For service tax classification of a tour operator, the applicable statutory definition and the permit-based use of the vehicle were treated as sufficient for prima facie coverage, and Rule 128 compliance was not regarded as essential for the earlier period; for the later period, the widened statutory wording dispensed with a specific vehicle-specification requirement for waiver consideration.

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