Point-to-point passenger transport is not tour operator service; extended limitation fails where facts were already known to revenue.

Point-to-point passenger transport under a tourism arrangement was held not to constitute tour operator service because the activity involved ordinary transport, not planning, organising or operating a genuine tour within the statutory definition. Service tax on that basis was therefore unsustainable. CENVAT credit on service tax paid for third-party insurance of buses used in exempt stage carriage operations was denied because input service credit is unavailable for exempt or non-taxable output services. The extended period of limitation was also held unavailable since the relevant facts were already within the department's knowledge, and suppression or wilful misstatement was not established.

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Issues: (i) Whether operation of buses from point to point under the stated tourism arrangement amounted to tour operator service and attracted service tax; (ii) whether CENVAT credit of service tax paid on third party insurance of buses used for exempt stage carriage services was admissible; (iii) whether the extended period of limitation was invocable on the facts of the case.

Issue (i): Whether operation of buses from point to point under the stated tourism arrangement amounted to tour operator service and attracted service tax.

Analysis: The definition of tour operator under section 65(115) of the Finance Act, 1994 covered planning, scheduling, organising or arranging tours and, after amendment, operation of tours in a tourist vehicle or contract carriage covered by a permit other than a stage carriage permit. The activity in question was found to be ordinary point-to-point transportation of passengers, with fares collected by the appellant and only a token amount passed to the tourism corporation. The arrangement did not show a common tour planning or organising activity of the kind contemplated by the statutory definition. The reasoning was aligned with the view that mere passenger transport without a common tour contract is closer to transport service than tour operation.

Conclusion: The demand of service tax on tour operator service was not sustainable and was set aside.

Issue (ii): Whether CENVAT credit of service tax paid on third party insurance of buses used for exempt stage carriage services was admissible.

Analysis: Credit is not available where the input service is used for providing exempt or non-taxable output services. The buses were used for undisputedly non-taxable stage carriage operations, and the insurance related to those buses. On that basis, the service tax paid on the insurance premium could not be treated as eligible CENVAT credit for the appellant.

Conclusion: The denial of CENVAT credit on third party insurance of buses was upheld.

Issue (iii): Whether the extended period of limitation was invocable on the facts of the case.

Analysis: The appellant was a Government organization and the dispute involved activities already within the revenue's knowledge through prior proceedings, audits, and returns. In such circumstances, the ingredients of suppression of facts or wilful misstatement were not established. The principle applied was that once the department is aware of the relevant facts, the extended limitation period cannot be invoked merely by repeating the same or similar allegations in later notices.

Conclusion: The extended period of limitation was not available to the Revenue and the appellant succeeded on limitation.

Final Conclusion: The appeal succeeded in part, with the service tax demand on tour operator activity and the disputed extended-period demands set aside, while the credit disallowance and the unresolved normal-period liabilities were left to be worked out by the adjudicating authority.

Ratio Decidendi: Point-to-point passenger transport without a genuine organised tour arrangement does not constitute tour operator service, and the extended period of limitation cannot be invoked where the relevant facts were already within the department's knowledge.

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