Tour operator service classification requires findings on contracts and permits before taxing employee transport vehicles.

Service tax liability for leasing buses or vehicles to transport employees depended on whether the vehicles answered the statutory meaning of a tourist vehicle under the Finance Act, 1994, read with the Motor Vehicles Act, 1988 and the Central Motor Vehicles Rules, 1989. The lower authorities had not examined the underlying contracts or recorded findings on the permits issued by the State authorities, though those facts were necessary to test taxability under tour operator service. The matter was therefore remanded for fresh adjudication with directions to consider the contracts, permits, and the applicability of the tour operator definition.

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Issues: Whether the activity of leasing buses or vehicles for transporting employees of clients was properly examined for classification as tour operator service, and whether the matter required remand because the lower orders lacked findings on the contracts and permits.

Analysis: The definition of tour operator, tour, and tourist vehicle under the Finance Act, 1994, read with the statutory meaning of tourist vehicle under the Motor Vehicles Act, 1988 and the specifications in the Central Motor Vehicles Rules, 1989, required examination of the actual contracts entered into by the appellant and the nature of permits issued by the State authorities. The lower authorities had not discussed the underlying agreements or recorded findings on the permit position, even though such findings were necessary to determine whether the vehicles used for employee transport answered the description of tourist vehicles for fastening service tax liability. The orders were therefore treated as lacking adequate reasoning.

Conclusion: The issue was not finally decided on merits and the matter was remanded for fresh adjudication with directions to examine the contracts, the permits, and the applicability of the tour operator definition.

Final Conclusion: The appeals succeeded only to the extent of setting aside the orders below and sending the matter back for reconsideration with specific directions on the factual and legal questions relevant to taxability.

Ratio Decidendi: When tax liability depends on whether vehicles fall within the statutory concept of tourist vehicle, the adjudicating authority must record findings on the governing contracts and permits before confirming service tax.

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