Tour operator service requires an arranged tour in a tourist vehicle; routine employee and school transport is excluded.

Transporting employees and school children daily in hired buses or minibuses was not tour operator service because the activity did not involve planning, scheduling, organising or arranging a tour, nor operation of a tour in a tourist vehicle as required by the statutory definition. The record did not show use of a tourist vehicle under the Finance Act and Motor Vehicles law, and the movement was confined to routine carriage between residences, workplaces and schools rather than a pleasure, sightseeing or similar arranged tour. Mere possession of a permit or use of a contract carriage was insufficient, so service tax was not leviable.

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Issues: Whether the activity of transporting employees and school children on a daily basis in hired buses or minibuses amounted to tour operator service and attracted service tax.

Analysis: The service came within the statutory definition only if the assessee was engaged in planning, scheduling, organising or arranging a tour, including operation of tours in a tourist vehicle covered by a permit under the Motor Vehicles law. The records did not show use of a tourist vehicle as contemplated by the Finance Act and the Motor Vehicles law. The transport activity was limited to carrying employees and children from residences to workplaces or schools and back on a regular basis. Such movement was not a pleasure trip, sightseeing trip, or similar arranged tour. The reasoning was consistent with the view that mere possession of a permit or use of a contract carriage does not by itself establish tour operator service.

Conclusion: The activity did not fall within tour operator service and the demand was not sustainable against the assessee.

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