Tour operator levy fails where staff buses are only contract carriages and lack tourist permits.

Buses used for conveyance of staff were treated as contract carriages and not as tourist vehicles under Section 2(43) of the Motor Vehicles Act, 1988 read with Rule 128 of the Central Motor Vehicles Rules. Because the vehicles did not hold tourist permits, the statutory condition for levy under Section 65(52) of the Finance Act, 1994 was not met. On those admitted facts, the service provider could not be classified as a tour operator, and the service tax demand for the relevant period was not sustainable.

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Issues: Whether the buses used for conveyance of staff, not being tourist vehicles and not holding tourist permits, fell within the service tax category of tour operator's service.

Analysis: The vehicles were admittedly contract carriages and were not tourist vehicles within the meaning of Section 2(43) of the Motor Vehicles Act, 1988 read with Rule 128 of the Central Motor Vehicles Rules. The permit requirement for attracting levy under Section 65(52) of the Finance Act, 1994 was not satisfied on the facts found, and the demand could not be sustained for the relevant period.

Conclusion: The service provider was not liable to be treated as a tour operator on the admitted facts, and the order setting aside the service tax demand was upheld.

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