2018 (4) TMI 777 - AT - Service Tax

Government of Rajasthan Prevails in Service Tax Dispute for Ranthambore National Park Fees

Dy Conservator of Forest & Dy Field Director Versus CCE, Jaipur

The Tribunal ruled in favor of the appellant, a department of the Government of Rajasthan, in a case concerning the liability for Service Tax on amounts ... Tour operator service - appellant comes under Department of Forests, Govt. of Rajasthan - amount recovered from the tourists are credited to the account of the State Govt. after reimbursing the vehicle owners towards the rent payable for such vehicles - Held that: - Wild Life (Protection) Act, 1972 empowers the State Government, for notification of National Park as well as to restrict the entry of visitors as well as vehicles into the National Park. The CBEC has issued master circular No.96/7/2007 ST dated 23.08.2007. One of the issues clarified is regarding whether the activities of sovereign/public authorities performed under the statute can be considered as provision of service, for purpose of levy of Service Tax. In S.No.999.01, circular has clarified that any fee collected as per the provisions of the relevant statute for performing mandatory and statutory functions under the provisions of any law are not to be treated as services provided for consideration. The activities of the appellant, are to be seen in the context of Wilde Life Protection Act as well as Rules - Forest Department has the mandatory duty to protect the environment and to safeguard forests and wild life - This cannot be considered as consideration for purposes of organizing tour. Demand set aside - appeal allowed - decided in favor of appellant. Issues:1. Whether the appellant, a department of the Government of Rajasthan, falls under the definition of a Tour Operator as per Section 65(115) of the Finance Act, 1994.2. Whether the activity of restricting entry of tourists and vehicles in Ranthambore National Park by the Forest Department constitutes a sovereign function.3. Whether the amounts collected by the Forest Department from tourists for entry permits and vehicle rentals are liable for Service Tax under the category of Tour Operator Service.Analysis:1. The appellant contested that as a department of the Government of Rajasthan, they were not functioning as a Tour Operator. They argued that their activities were in line with the sovereign function of protecting the environment and wildlife, mandated by the Constitution and the Wild Life (Protection) Act, 1972. The appellant highlighted that all collected amounts were reimbursed to vehicle owners, and they were not engaged in organizing tours. They also referred to CBEC clarification that charges by sovereign/public authorities for statutory functions are not subject to Service Tax.2. The Department of Forests restricted entry into Ranthambore National Park to protect wildlife and forests, in accordance with constitutional and statutory obligations. The Forest Department's actions were aimed at maintaining the ecological balance, and the fees collected for entry permits and vehicle rentals were deposited into the State Treasury after reimbursing vehicle owners. This indicated that the amounts collected were in the nature of statutory fees for performing mandatory functions, not for organizing tours.3. The Tribunal examined the definition of a Tour Operator under the Finance Act, 1994, both before and after a specific date. It was noted that the Forest Department's activities did not align with the definition of a Tour Operator. Referring to a CBEC circular, it was clarified that fees collected for statutory functions under relevant statutes are not considered services for consideration. The Tribunal concluded that the Department's actions were in line with statutory obligations, and the amounts collected were not subject to Service Tax as they were not for organizing tours.In conclusion, the Tribunal set aside the Service Tax demand on the amounts collected by the Forest Department, ruling in favor of the appellant based on their sovereign function and statutory obligations.