Tour operator service classification fails for employee transport in contract carriage without tourist vehicle use.

Transporting staff between their residences and the factory in a contract carriage was not taxable as tour operator service. For the earlier period, the definition applied only to operating tours in a tourist vehicle under the Motor Vehicles Act, and the activity did not involve such vehicles or the business of planning, scheduling, organising or arranging tours. For the later period, although the definition expanded to include contract carriage in certain circumstances, the record still showed only employee transport and no use of tourist vehicles for the impugned service. The demand and penalties were therefore unsustainable.

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Issues: Whether transport of staff to and from their workplace in a contract carriage, without use of tourist vehicles, fell within the taxable category of tour operator service under the relevant statutory definition.

Analysis: The applicable definition of tour operator service changed during the material period. For the earlier period, the service covered operating tours in a tourist vehicle permitted under the Motor Vehicles Act, 1988. For the later period, the definition expanded to include planning, scheduling, organising or arranging tours, and also operating tours in a tourist vehicle or contract carriage under a permit other than a stage carriage permit. The activity in question was confined to transporting employees between their residences and the factory and did not involve operating tours in tourist vehicles or the business of planning, scheduling, organising or arranging tours. The material on record did not show deployment of tourist vehicles for the impugned activity.

Conclusion: The activity was not taxable as tour operator service for either period, and the demand and penalties could not be sustained.

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