By TIOL News Service

MUMBAI, JULY 16, 2013: THE appellant entered into agreements with various corporates in Nashik such as Glaxo Smithkline Ltd., Siemens Ltd., VIP Industries Ltd., and VTC Ltd. for transport of the company employees from their residences to their offices and back and collected service charges during the period 10/09/04 to 31/03/2007. The department was of the view that the said service is taxable under the category of ‘tour operators' services and accordingly issued a notice dated 05/10/07 inter alia demanding service tax of Rs. 4,50,425/-.

The Asst. Commissioner of Service Tax, Nashik dropped the proceedings.

In revisionary proceedings, the Commissioner set aside this order and confirmed the service tax along with interest thereon and also by imposing equivalent amount of penalty.

So, the appellant is before the CESTAT.

It is submitted that they have undertaken the said activity using a stage carriage and prior to 10/09/04 the said activity was not taxable. Furthermore, the definition of tour operator under Section 65 (115) of the Finance Act, 1994 was amended with effect from 10/09/04 and as per the revised definition, ‘tour operator' means any person engaged in the business of planning, scheduling, organizing or arranging tours 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 thereunder. The taxable service is defined under section 65 (105) (n) as “any service provided or to be provided to any person, by a tour operator in relation to a tour.” The appellant does not undertake any planning, scheduling, organizing or arranging tours so as to come within the definition of the tour operator. They are merely providing transportation of the company's employees from their residences to their offices and back. Therefore, they are not liable to service tax under the category of tour operator during the impugned period.

It is further submitted that the Central Government had vide notification No. 20/2009-ST exempted tour operator's services having a contract carriage permit for interstate or intrastate transportation of passengers, excluding tourism, conducted tourism charter or hire service, from the whole of service tax leviable thereon and the said exemption was given retrospective effect from 01/04/2000 vide section 75 of the Finance Act, 2011. Reliance is placed on the decision in Ideal Travels - (2011-TIOL-1850-CESTAT-BANG) in support.

The Revenue representative relied on the decisions in Valsala Travels Pvt. Ltd. vs CST, Bangalore - (2010-TIOL-311-CESTAT-BANG), Sri Pandyan Travels - (2003-TIOL-34-HC-MAD-ST) Secy., Federation of Bus-operators Association of Tamil Nadu - (2003-TIOL-33-HC-MAD-ST) to support the order of the revisionary authority. It is also submitted that the appellant would not be eligible for the benefit of exemption under notification No. 20/09-ST as the service is charter hiring of the vehicles which is excluded from the scope of the exemption. In fine, the Revenue representative submitted that the appellant should be put to terms.

The Bench distinguished the case laws cited by the appellant and observed that the ratio of the decisions cited by the Revenue representative would squarely apply. It was also observed that the notification 20/09-ST would not apply as the same excludes from its scope such services if they are of the nature of hire service.

Holding that the appellant had not made a case for complete waiver of the dues adjudged against them the CESTAT directed the appellant to make a pre-deposit of Rs.1,34,253/- which is the demand for the normal period and report compliance.

(See 2013-TIOL-1077-CESTAT-MUM)