Whether the person providing transport services to IFFCO using luxury bus can be treated as tour operator and service tax be levied?

PJ/CASE LAW/2016-17/3211

Case-COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD Versus ALOK PRAKASH

Citation- 2016 (41) S.T.R. 477 (Tri. - Del.)

Brief Facts-- Revenue has filed appeal against Order-in-Appeal dated 8-4-2009 which set aside the order-in-original dated 10-5-2008. The primary adjudicating authority vide the said Order-in-Original confirmed a demand of Rs. 45,247/- for the period April, 2001 to September, 2002 along with interest and also imposed penalties under Sections 75, 76, 77 and 78 of the Finance Act, 1994 on the ground that the respondent had provided ‘Tour Operator’ service to IFFCO is inasmuch as, as per the contract entered with IFFCO, it transported the families and employees of IFFCO from one point to another at an agreed rate and in a luxury bus which had a permit issued under the Motor Vehicles Act, 1988 in relation to such vehicles.
Appelants Contention-The Commissioner (Appeals) held that the respondent did not satisfy the definition of ‘Tour Operator’ and therefore was not liable to impugned service tax.
The Revenue has contended that as per Section 65(52) of the Finance Act, 1994 ‘Tour Operator’ was defined as under : -
“Tour Operator means any person engaged in business of operating tours in a tourist vehicle covered by a permit granted under Motor Vehicles Act, 1988 or rules made thereunder.”
Thus, the service rendered by the respondent clearly fell under the category of ‘Tour Operator’ service and the respondent satisfied the definition of tour operator.

Respondents Contention-. In its cross-objections, the respondent contended that it was not engaged in the business of planning scheduling organising or arranging tours and was only engaged by IFFCO to carry their staff/families for marketing, schools and working shifts and general shifts from residential colony to factory/factory to residence and cited several judgments published in 2006 and 2007.

Reasoning Of Judgement-When the case was taken up for hearing, no one appeared on behalf of the respondent. The ld. Departmental Representative cited the judgment of CESTAT in the case of Friends Tour & Travels v. CCE Noida [2014 (33)S.T.R.585 (Tri.-Del.)] contending that the issue is squarely covered by the said judgment.
The contentions of Revenue were considered and also of the respondent contained in the memorandum of cross-objections. The agreement of the respondent with IFFCO quoted in the Order-in-Original inter alia states as under: -
“You will place at the disposal of IFFCO one Number of 52 sealer luxury bus model 1999. This will be used for transportation of men and material of IFFCO. Generally the vehicle will run between Phoolpur and Allahabad but sometimes it may required to go outside Allahabad also. In such case you will arrange route permit for that destinations IFFCO will reimburse the charges for route permit when presented with monthly bills.”
In terms of Section 65(113) ibid tour means a journey from one place to another irrespective of the distance between such places. We can safely adopt this for our purpose. Thus, there is no doubt that the journey performed by the employees/families of IFFCO clearly fell under the scope of TOUR. The definition of tour operator given in Section 65(52) ibid quoted above clearly shows that the journeys organised by the respondent in its bus clearly made it a tour operator as the journey were organised in contract carriages which were duly granted permits under the Motor Vehicles Act, 1988. It was noticed that the respondent in the cross-objections cited the judgments of Tamil Nadu State Transport Corporation v. CCE, Chennai [2006 (12) LCX 152 = 2007 (6)S.T.R.322 (Tri.-Chen.)], Gayatri Enterprises [2007 (1) LCX 177] and Gatulal V. Patel v. CCE, Vadodara-II [2007 (5) LCX 13 = 2007 (7)S.T.R.426 (Tri.-Ahmd.)]. The CESTAT’s judgments in the case of Tamil Nadu State Transport Corporation v. CCE, Chennai was delivered by a Single Member Bench and the judgement of Gayartri Enterprises is a judgment of Commissioner (Appeals) and therefore there is no need to go into the facts of these cases. In the case of Gatulal V. Patel v. CCE, Vadodara-II (supra) it is stated that the vehicles in which the tour was performed should have conformed to the specification of a tourist vehicle. It is not the case of the appellant that its vehicle did not conform to such specifications. Other judgment of CCE, Vadodara v. Gandhi Travels [2007 (92) LCX 51 = 2007 (6)S.T.R.430 (Tri.-Ahmd.)] cited is also similarly distinguishable. It was observed that the definition of tour operators during the relevant period covered persons engaged in business of operating tours in a tourist vehicle having a permit under the Motor Vehicles Act, 1988. In the present case there is no doubt that the service was rendered using luxury bus which was having permit under the Motor Vehicles Act, 1988 and the said bus was not a stage carriage but a contract carriage. Thus, the respondent provided tour operator service. Indeed the issue is squarely covered against the respondent by CESTAT’s judgment in the case of Friends Tour & Travels v. CCE Noida (supra) wherein it was held that the activity of providing buses to LG Electronics for dropping of staff was covered under definition of tour and the assessee was covered under the definition of tour operator and was liable to pay service tax under Section 65(105)(n) read with Section 65(115) ibid.

Decision-Appeal allowed

Comment- Since,as per Section 65(52) of the Finance Act, 1994 ‘Tour Operator’ was defined as under : -
“Tour Operator means any person engaged in business of operating tours in a tourist vehicle covered by a permit granted under Motor Vehicles Act, 1988 or rules made thereunder”
, thus, the service rendered by the respondent clearly falls under the category of ‘Tour Operator’ service and the respondent satisfied the definition of tour operator. Therefore service tax should be levied on the assessee.

Prepared By- PRANITI LALWANI

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PJ/CASE LAW/2016-17/3211

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