Service tax on tour and cab operators upheld as a tax on services, not on passenger carriage or profession.

Service tax applied to stage carriage operators using spare buses, contract carriage operators, and motor cab or maxi cab operators when their activities amounted to touring or renting cabs. The court treated the levy as one on the taxable service rendered, not on passengers carried or on the profession or trade of the operator, and held that the amended scheme covered business renting of cabs without needing the earlier licence framework. On constitutional competence, the levy was upheld under Parliament's residuary power because Entries 56 and 60 of List II did not apply. The challenge was rejected, subject to the factual question whether a vehicle was in law a tourist vehicle.

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Issues: (i) Whether stage carriage operators using spare buses, contract carriage operators, and motor cab or maxi cab operators fell within the service tax provisions as tour operators or rent-a-cab scheme operators; (ii) whether the impugned levy was beyond the legislative competence of Parliament under the Constitution.

Issue (i): Whether stage carriage operators using spare buses, contract carriage operators, and motor cab or maxi cab operators fell within the service tax provisions as tour operators or rent-a-cab scheme operators.

Analysis: The definition of tour operator turned on the use of a tourist vehicle in relation to a tour, and the definition of tourist vehicle incorporated the Motor Vehicles Act concept of a contract carriage constructed or adapted to prescribed standards. A spare bus under a stage carriage permit could, under the statutory scheme, operate as a contract carriage for special occasions, and the absence of a special tourist permit did not exclude the operator from the service tax net. The amended provisions also widened rent-a-cab scheme operator to any person engaged in the business of renting cabs, without requiring a licence under the earlier Rent-a-Cab Scheme. Motor cabs and maxi cabs, when rented out in the course of business, were likewise covered as taxable services.

Conclusion: The service tax provisions applied to the petitioners in the relevant categories, subject to the factual question whether the vehicle was in law a tourist vehicle, which the operators could raise before the departmental authorities; otherwise, the challenge failed.

Issue (ii): Whether the impugned levy was beyond the legislative competence of Parliament under the Constitution.

Analysis: The levy was characterised as a tax on services provided by tour operators and rent-a-cab scheme operators, not as a tax on passengers carried by road or on the profession, trade, or calling of the operators. Entry 56 of List II was held inapplicable because the incidence of the levy was not the carriage of passengers but the service rendered. Entry 60 of List II was also held inapplicable because the tax was not a professional tax on the act of carrying on business, but a distinct tax on the service aspect. Applying the pith and substance and distinct-aspect approach, the levy was within Parliament's competence under the residuary power.

Conclusion: The service tax provisions were within legislative competence and were not invalid on the constitutional challenge.

Final Conclusion: The service tax levy on the concerned classes of operators was upheld, and the writ petitions were dismissed.

Ratio Decidendi: A service tax on the taxable service rendered by a tour operator or rent-a-cab scheme operator is constitutionally distinct from a tax on passengers carried by road or a tax on profession, trade, or calling, and Parliament can validly levy it under the residuary power.

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