2016 (7) TMI 473 - HC - Service Tax

Tour operator deemed liable for service tax demand and penalty under Finance Act

The court upheld the assessing authority's decision confirming service tax demand and penalty against the petitioner for operating tours on vehicles owned ... Tour operator services - giving on hire the vehicle - Adjudicating while confirmed the demand observed that, they are not mere owners of contract carriages let on hire to customers. The staff of the carriage including the driver is operating the trips and tours. The carriages are used for marriage parties, excursions and group trips. It is not a mere instance of hiring of contract carriage. - The main contention urged by the petitioners is based on Ext.P2 judgment of this Court. Ext.P2 judgment will not render any assistance to the petitioners. It was only an observation and cannot bind the department to form an opinion that merely for the reason that the vehicles are given for hire, service tax cannot be imposed. Held that:- When the petitioners were relegated to the appropriate authority and the right to contest the validity of the provisions were left open, it has to be assumed that there is no finality attached to the observation made by the learned Single Judge. Therefore I do not think that the judgment in Ext.P2 had in any way curtailed the right of the assessing authority to consider on facts as to whether the petitioners are tour operators or not. - Further, the authority had come to a finding that petitioners are not mere hirers. Petitioners are not persons who merely hire the vehicle, whereas it amounts to operation of the tour itself. That apart, the following words in the statute “any person engaged in the business of operating tours in a tourist vehicle covered by a permit” is liable to be termed as a tour operator. The finding by the assessing authority is that “the conditions printed on the specimen order form supplied to customers clearly show that the trips are in fact operated by the assessee and is not just a hiring of contract carriage”. It is also found that the staff of the carriage including the driver is operating the trips and tours. - All relevant facts had been considered and the authorities had come to a proper decision which cannot be termed as illegal or perverse - Decided against the petitioner. Issues:Challenge to order confirming service tax demand, penalty, and seeking a declaration of non-exigibility for service tax liability.Analysis:1. The petitioner challenged Ext.P14 order confirming a demand for service tax and penalty for financial years 2004-05, 2005-06, and 2006-07, seeking a declaration of non-exigibility for service tax liability.2. The petitioner claimed to be engaged in letting contract carriage vehicles on hire, contending they were not providing any service other than vehicle hire.3. Previous legal proceedings involved directions from the High Court regarding service tax liability for vehicle owners letting out vehicles on hire.4. The assessing authority held the petitioner liable as a tour operator under the Finance Act, 1994, based on the operation of tours using contract carriages.5. The respondent argued that the petitioner's activities fell within the definition of a tour operator, thus subject to service tax liability.6. Ext.P14 order found the petitioner operating tours on vehicles owned by them, not merely hiring out contract carriages, leading to service tax liability.7. The court noted the assessing authority's findings that the petitioner's staff operated tours, indicating service provision beyond mere vehicle hire.8. The court upheld the authority's decision, stating it was based on relevant facts and not illegal or perverse, dismissing the writ petition challenging Ext.P14 order.