Tour
Operators Service
CESTAT,
Delhi Bench
Pandit
Motor Service
v.
Commissioner
of Central Excise, Jaipur
JUSTICE
R.K. ABICHANDANI, PRESIDENT
AND
DR. T.V. SAIRAM, TECHNICAL MEMBER
SERVICE
TAX APPEAL NO. 43 OF 2006
FINAL
ORDER NO. 391 OF 2007-ST
June
29, 2007
Section 65 of the Finance Act,
1994 - Tour Operator’s service - Whether, once concerned authorities had
permitted an assessee for using particular vehicle as a ‘tourist vehicle’
having verified various parameters, such a vehicle by virtue of its being used
otherwise cannot be classified and treated as a ‘non-tourist vehicle’ - Held,
yes - Whether, therefore, once specifications make a particular vehicle
eligible to be a ‘tourist vehicle’ and further an authority endorses such a
classification, how same was put into use by permit holder, would not
materially change position under law and will be covered by provisions of
service tax under category of tour operator - Held, yes
[Matter was remanded for purpose
of quantification of demand and penalty after taking into consideration
relevant exemption notification]
Circulars and Notifications:
Notification No. 15/2007-ST dated
4-4-2007.
The adjudicating authority held the assessee to be engaged in providing the taxable service as a ‘tour operator’ in ‘tourist vehicles’ covered by the permits issued under section 88(9) of the Motor vehicles Act, 1988. The Commissioner (Appeals) also upheld the order of the adjudicating authority.
On appeal:
As per the definition available under the Act, the vehicles used by the assessee clearly fall under the meaning and category of ‘tourist vehicle’ in accordance with clause (43) of Section 2 of the Motor Vehicles Act, 1988. This was further strengthened by the fact that the said vehicles stand endorsed by a permit issued by the appropriate authorities under the law. It was also evident that such vehicles have been put to use by the assessee for operating ‘tours’ as defined under clause (94) of section 65. [Para 9]
The provisions under clauses (94), (95) and (96) of section 65 and also the definition of ‘taxable service’ as available under clause (90) of section 65 read together and the definition as available under the Motor Vehicles Act, 1988 in respect of contract carriage (7) tourist vehicle (43) all go together to state that it was not necessary how the vehicle had been used or abused. What was important here was whether the vehicles were capable of being used as ‘tourist vehicles’ and whether the same had been permitted by the appropriate authorities for such use as ‘tourist vehicle’. [Para 11]
Form R.S.5.17 (which refers to All India Tourist Permit issued under rule 5.9(x) as issued to the assessee by the Office of the State / Regional Transport Authority) had been issued on the basis of certain specifications/conditions as referred to at S.No. 9 of para 13 of the said permit. On going through its attachment, it appeared that the assessee was required to ensure certain permissible specifications relating to month and year of manufacture of the vehicle, number of cylinders, H.P., seating capacity, weight, number of tyres, weightage, etc., which had to be declared for the purpose of obtaining a permit. A copy of such application before the concerned authority had, however, not been made available to us to verify whether any undertaking before such authorities had been made by the assessee for issue of such permit. Even assuming that no undertaking had been made by the assessee before the appropriate authorities, it could safely be concluded that any vehicle that plies on the road cannot be sought for permission as ‘tourist vehicle’ and in order to be eligible for such a permit, the vehicle has to fulfil certain basic requirements. [Para 12]
Once the concerned authorities had permitted the assessee for using a particular vehicle as a ‘tourist vehicle’ having verified the various parameters, such as vehicle by virtue of its being used otherwise cannot be declassified and treated as a ‘non-tourist vehicle’. Therefore, it was to be held that once specifications make a particular vehicle eligible to be a ‘tourist vehicle’ and further an authority endorses such a classification, how the same was put into use by permit holder, would not materially change the position under law. Therefore, there was no force in the assessee’s contention that it was not covered under the provisions of the service tax law. [Para 13]
The Central Government having been satisfied that a practice was generally prevalent regarding levy of service tax (including non-levy thereof) under section 66 of on services provided by a tour operator providing services in relation to transport of passengers from one place to another (other than services provided in relation to package tours operating under a contract carriage permit, had issued a notification No. 15/2007-ST dated 4-4-2007 granting exemption under section 11C of Central Excise Act, 1944 read with section 83. This notification which had not been part of the proceedings before the authorities below had come to be issued recently much after the Commissioner had passed his order and obviously the same had not been referred to by assessee. [Para 14]
Had that notification been made applicable in the case of the assessee? There would be sizeable relief by way of payment of tax by it which would alter the amount assessed in the impugned order and would also have a consequent effect on the penalty stands imposed under the said order. It was, therefore, necessary that this aspect had to be taken note of while arriving at the quantum of tax/penalty in the subject case. To that extent the matter was to be remanded to the adjudicating authority to go through the changed provisions under the law particularly with reference to notification No. 15 of 2007 issued under section 11C read with section 83 so as to re-determine the quantum of tax and penalty leviable on the appellants. The appellants have also pleaded for benefits under section 80 contending that non-filing of the returns could not be a reasonable cause for levying penalty especially since the Central Government is satisfied that the practice followed by them was generally prevalent at the relevant time. Therefore, the adjudicating authority was to be directed to take into account that aspect as well while passing an order of re-quantification of tax and penalty in the matter. The appeal was accordingly partly allowed by way of remand, only on the question of re-quantification of the tax amount and penalty and as rest of the order stands confirmed. [Para 15]