2009 (7) TMI 133 - AT - Service Tax

Tribunal rules in favor of appellant in Service Tax case based on 'tour operator' criteria.

PRAKASH & POONAM TOURS & TRAVELS Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II

The Tribunal allowed the appeal, ruling in favor of the appellant in a Service Tax liability case. The Tribunal found that the appellant did not meet the ... Transport of employees in bus – tour operator - appellant carries employees of Rajasthan State Mines & Minerals Ltd. through its buses from Udaipur to Jhamarkotra, Jhamarkotra to Kharwachanda and vice versa - The Authorities held that when there was a contract carriage for transportation of employees, it was a tour operator – held that - This definition has three important elements. First one is that the assessee must have been engaged in the business of operating tours. There is no finding with cogent evidence in the present case. The second element of law is that the tours must be conducted using the tourist vehicle. But the vehicles used in the present case was not tourist vehicle. The third element of law is that the vehicle must have been under the grant of a permit under Motor Vehicles Act to conduct tourism business. There is also no evidence on record in this respect – demand set aside – appeal allowed. Issues:Interpretation of the term 'tour operator' under Section 65(52) of the Finance Act, 1994 for the purpose of Service Tax liability.Analysis:The appellant argued that their use of buses to transport employees did not constitute a tourist operation as defined under the Finance Act, 1994. They contended that their vehicles were not tourist vehicles and no permit for such purpose was granted. The appellant highlighted that the Authorities had misconceived the law and failed to provide evidence to prove that the vehicles were used for tourist operations. They referenced a decision of the Hon'ble High Court of Madras to support their case.The Respondent, represented by the Ld. DR, argued that the appellant's carriage contracts made them liable for Service Tax, citing a decision of the Hon'ble High Court of Madras in a similar case. The Authorities held against the appellant based on these arguments.Upon examination, the Tribunal considered the definition of 'tour operator' under Section 65(52) of the Finance Act, 1994. The Tribunal noted three essential elements: engagement in the business of operating tours, use of tourist vehicles, and possession of a permit under the Motor Vehicles Act. They found no evidence supporting these elements in the present case. Referring to the judgment of the Hon'ble High Court of Madras, the Tribunal emphasized that non-compliance with the definition of tourist vehicles under the Motor Vehicles Act exempted the appellant from Service Tax liability. As a result, the Tribunal allowed the appeal in favor of the appellant, providing consequential relief.In conclusion, the Tribunal's decision hinged on the interpretation of the term 'tour operator' and the specific requirements outlined in the Finance Act, 1994. The lack of evidence supporting the essential elements of a tour operator led to the Tribunal setting aside the impugned order and ruling in favor of the appellant.