HOLDER OF CONTRACT CARRIAGE PERMIT IS NOT LIABLE TO SERVICE TAX AS PROVIDER OF TOUR OPERATOR

[Mr. M. GOVINDARAJAN]

      Sec. 65(105)(n) of the Finance Act, 1994 (hereinafter referred to as 'Act') defines taxable service relating to tour as a service provided or to be provided to any person by a tour operator in relation to a tour.

      Sec. 65(113) of the Act defines 'tour' as a journey from one place to another irrespective of the distance between two places.

      Sec. 65(115) defines 'tour operator' as any person engaged in the business of planning, scheduling or arranging tours (which may include arrangement for accommodation, sight seeing or other similar services) by any mode of transport and includes any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988 or the rules made there under.

      According to Sec. 65(115) of the Act ' a tourist vehicle' has the meaning assigned to it in Sec. 2(43) of the Motor Vehicles Act, 1988, which defines 'a tourist vehicle' as a contract carriage constructed or adapted and equipped in accordance with the specification as may be prescribed in this behalf.   Rule 128 of Central Motor Vehicles Rules, 1988 specifies various special conditions as regards dimensions, structures, passenger entrance and exit, emergency doors, windows, driver entry and exit etc.,   To get a vehicle registered as a tourist vehicle the assessee has to conform the vehicle to the specifications given under Rule 128 of the Central Motor Vehicles Act, 1988.

      A question arised a in a case whether contract carriage permit holder is liable to service tax as a provider of tour operator in the case law 'Bhagwan Singh Gulati V. Commissioner of Central Excise (Tri. Del) 2008 -TMI - 30099 - CESTAT NEW DELHI.

      The appellants in the said case filed their appeals against impugned orders whereby demand of service tax was confirmed by treating the appellants as provider of tour operator service.   The appellants are having contract carriage permit and deployed their vehicles with various manufacturers for carrying employees of the factory.   Revenue considers that the appellants are providing services of tour operator.

CONTENTION OF THE APPELLANTS:

      The appellants put forth before the Tribunal the following arguments:

·  They are not providing any service as tour operator as they do not have any tourist permit;

·  As per definition of tour operator means any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act or the rules there under;

·  They are having contract carriage permit and not tourist permit and not liable to pay service tax as tour operator.

The appellants in support of their case relied on the following decisions of the tribunals:

·  Commissioner of Central Excise V. Gandhi Travels 2007 -TMI - 1406 - CESTAT, AHMEDABAD;

·  Gatulal V. Patel V. Commissioner of Central Excise 2007 -TMI - 1547 - CESTAT,AHMEDABAD;

·  Prasanna travels (P) Ltd V. Commissioner of Central Excise 2008 -TMI - 30602 - CESTAT MUMBAI.

In 'Gandhi Travels ' case the respondent produced certificate issued by State Transport Authority to four vehicles which are in question were covered under 2(7) of the Motor Vehicles Act as a contract carriage but they were not covered under Sec. 2(43) of the Motor Vehicles Act as tourist vehicle.   On such evidence being produced before the Commissioner (Appeals) learned Commissioner (Appeals) has held that these four vehicles would fall out of ambit as a Tourist Vehicles and granted relief to the respondents.   The Revenue has not produced any contrary evidence before the Tribunal to indicate that the vehicles in question are not tourist vehicles.

      In 'Gatulal V. Patel' case the factory employees are transported in buses which are not tourist vehicles.   The vehicles are registered as a contract carriage.   The decision of tribunal in 'Gandhi Travels' case that the tourist vehicle to be read in line with the provision of Motor Vehicles Act and Rules there under and when vehicles are not covered by description of tourist vehicles and not run as tourist vehicles, persons concerned are not covered under tour operator.  On line with the decision in 'Gandhi Travels' case the Tribunal held that the appellants are not liable to service tax as tour operator.

      In 'Prasanna Travels Pvt., Ltd.,' case the appellant contested the demand on the ground that they are not covered under the category of 'tourist vehicles'.   The Revenue reiterated the findings of adjudicating authority who confirmed the demand of tax as tour operator.   The Revenue further contended that the appellant was using vehicles to transport the public from point to point.   The appellant had permit from the Transport Authority to do so to indicate that the appellant was doing the business of tour operator.

      The tribunal found that the Adjudicating Authority has not come to the conclusion as to how the vehicles operated by the appellants would get covered under the provisions of Sec. 65 (115) of the Act.   It is also on record that the transport authorities have issued permit clearly indicating that the vehicles, which were plied by the appellants, were as stage carriers and not a tourist vehicle.

CONTENTION OF REVENUE:

      The contentions of the Revenue are that-

·  the appellants are registered under the Act and having permit as per meaning of tourist vehicle, a contract carriage constructed or adapted and equipped and maintained in accordance with such specifications as may be prescribed in this behalf;

·  as the appellants are having contract carriage permit presumption is that of is tourist vehicle and are liable to pay service tax;

The Revenue relied upon the decisions of-

·  Secretary, Federation of Bus Operators Association V. Union of India (2002) 175 CTR (Mad) 570;

·  Pandit Motor Service V. Commissioner of Central Excise 2007 -TMI - 2364 - CESTAT, NEW DELHI.

The tribunal analyzed the arguments and case laws relied by both parties.   The tribunal observed that Madras High Court in the case of 'Secretary, Federation of Bus Operators Association (Supra) held as - "At this juncture, it will be seen that as per Sec. 2(43) of the Motor Vehicles Act, the Motor Vehicles Rules specifically provide the conditions for a vehicle being recognized as 'tourist vehicle' under Sec. 2(43).  We can conveniently refer to Rule 128 of Motor Vehicles Rules, which provides the conditions for a tourist vehicle other than motor cabs, maxi-cab, camper's van, house trailer which a tourist vehicle shall conform to.   Number of specifications are given in that rule in respect of dimensions, structure, door arrangement, ventilation, luggage space, seating arrangement, painting and furnishing, lighting, fittings and accessories etc.,  In short Rule 128 specifies the standard of comforts which are required to be there in a vehicle for being recognized as the 'tourist vehicle' under the Central Motor Vehicle Rules.  We have, therefore, no hesitation first to hold that the first and foremost condition for a person to be held as 'tour operator' within the meaning of Sec. 65(52) of the Finance Act is that he must be engaged in the business of operating tours in a 'tourist vehicle' in terms of Sec. 2(43) of the Motor Vehicles Act and in no other type of vehicle and, therefore, necessarily such vehicle must conform to the conditions prescribed under Rule 128 of the Central Motor Vehicles Rules.

      In 'Pandit Motor' case the tribunal observed that in that case the assessee had tour permit.   Case of the assessee was that though they have tourist permit but running their vehicle as stage carriage.   In these circumstances the tribunal held the assessee liable to pay service tax.   The facts of the present case are different as the appellants are not having tourist permit.

      The tribunal held that in view of the decision of the Hon'ble High Court and tribunal as the appellants are not having tourist permit, they are not liable to service tax as provider of tour operator and set aside the impugned order.