Custom, Excise & Service Tax Tribunal
Maharashtra State Road Transport ... vs Commissioner Of Central Excise, ... on 30 October, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL Nos. ST/4, 52, 82, 60, 270, 271, 239, 257, 258/08-Mum ST/CO/38, 40/09 (Arising out of Orders-in-Original No. 24/ST/07 dated 24.10.2007, No. 23/ST/07 dated 24.10.2007 passed by Commissioner of Central Excise & Customs, Nasik, Orders-in-Appeal No. AKD/11/NGP/2008 dated 31.1.2008 passed by Commissioner of Central Excise (Appeals), Nagpur, No. 22/ST/07 dated 24.10.2007 passed by Commissioner of Central Excise & Customs, Nasik, No. IPL/151 to 153/NSK/2008 dated 27.8.2008 passed by Commissioner of Central Excise & Customs, Nasik, No. JAK(226-227)55&70/2008 dated 8.8.2008 passed by Commissioner of Central Excise (Appeals), Aurangabad) For approval and signature: Honble Mr. S.S. Kang, Vice President Honble Mr. P.K. Jain, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Maharashtra State Road Transport Corpn. Ltd. Appellant Vs. Commissioner of Central Excise, Nashik/Nagpur Respondent AND Commissioner of Central Excise, Nashik/Nagpur Appellant Vs. Maharashtra State Road Transport Corpn. Ltd. Respondent Appearance:
Shri Jayesh P. Doshi, C.A. and Shri Kadam, Advocate, for assessee Shri V.K. Agarwal, Additional Commissioner (AR), for Revenue CORAM:
Honble Mr. S.S. Kang, Vice President Honble Mr. P.K. Jain, Member (Technical) Date of Hearing: 4.10.2013 Date of Decision: 30.10.2013 ORDER NO Per: P.K. Jain In this order, we are dealing with nine appeals. Three appeals have been filed by Maharashtra State Road Transport Corporation Ltd. (MSRTC) while the remaining six appeals have been filed by the Revenue. In all the nine appeals, common issue is involved and, therefore, are being dealt with in this order. The appeals are pertaining to different divisions of MSRTC, viz. Jalgaon, Dhule, Nashik, Ahmednagar and Chandrapur. Period involved is from January 2001 to 30.6.2007. The period involved in different appeals is different but within the limits mentioned earlier.
2. The assessee is engaged in the business of transportation of persons and operate their activity in two categories:-
(i) Stage Carriage:- Transport of passengers on a specified route wherein the individual passenger pays fare either for the whole journey or for the stages of journey. This is a foremost activity of the Corporation.
(ii) Contract Carriage:- Buses are provided on Hire/Lease under a Round Trip Contract or a Drop Contract wherein the entire vehicle is provided based on seat capacity, route, pick-up place and final destination specified in the contract. They have given the nature of occasions, wherein the buses are let out on hire
a) Marriages
b) Educational Purpose
c) General or local election/poll for transportation of personnel deputed by Election Commission/local authority for conducting the Poll.
d) Transportation of police force in even of riots, visits by MPs, MLAs, politicians etc.
e) Transportation of injured railway passengers in case of accidents.
3. The dispute is whether contract carriage operation can be considered as tour and subject to service tax under the category of tour operator.
4. In the appeals filed by the assessee , the Commissioner in her adjudication order has taken a view that all the operations undertaken by the assessee under contract carriage would fall under the category of tour operator as defined under Section 165(105)(a) of the Finance Act, 1994. The Commissioner has taken a view that once the assessee is operating tours under contract carriage, they are liable to be covered as tour operator and, therefore, liable to pay service tax. The assessee is in appeal against the said orders on the ground that their vehicles do not meet the specifications for tourist vehicle. Since the vehicles do not meet the specification of tourist vehicles, even when these are being operated as contract carriage, they are not liable to pay service tax. The assessee has also detailed the specifications for tourist vehicle as also the specification relating to their ordinary buses to prove the point that their vehicles do not meet the specifications of tourist vehicle. In respect of the remaining six cases, the original authority confirmed the demand. However, on appeal filed before the Commissioner (Appeals), the Commissioner (Appeals) has allowed the appeals mainly on the ground that the issue is settled in favour of the assessee by the Tribunals decision in the case of CCE vs. Gandhi Travels reported in 2007 (6) STR 430, which has been upheld by the Honble Gujarat High Court as reported in 2009 (13) STR 579 (Guj.) and Prasanna Travels Pvt. Ltd. vs. CCE reported in 2007 (8) STR 34 (Tri.). The Commissioner (Appeals) in other cases has also taken the view that there is no reason to believe that the vehicles meet the specification of tourist vehicle and, therefore, cannot be charged to service tax.
5. Heard both sides.
6. The learned counsel for the assessee cites this Tribunals decision in their own case in appeal Nos. ST/61 to 63/08, 317/09, 130 to 135/08 in support of their contention. The learned counsel stated that in view of this decision, there is no reason to charge the service tax. He further submitted that till 2008, the requirement of tourist vehicle continued in the law and it is only in 2008 that in addition to the tourist vehicle, contract carriage has been added. Thus, before 2008, on this ground alone, they are not liable to pay service tax.
7. The learned AR, on the other hand, stated that in view of the definition in the statute and in view of the Honble Madras High Courts decision in the case of Secy. Federn. of Bus-operators Assn. of T.N. vs. UOI reported in 2001 (134) ELT 618 (Mad.), which has been upheld by the Honble Supreme Court as reported in 2003 (157) STR A144 (SC), the assessee is liable to pay service tax. The learned AR further quoted the Honble Madras High Courts judgment in the case of Sri Pandyan Travels vs. CCE, Chennai-II reported in 2006 (3) STR 151 (Mad.) and the Tribunals decision in the case of Parveen Travels (P) Ltd. vs. CST, Chennai reported in 2008 (11) STR 357. He also quoted this Tribunals decision in the case of CCE, Nasik vs. Mrs. Cynthia Rebello in appeal Nos. ST/159-161/07, wherein the Tribunal has given the judgment favourable to the Revenue. The learned AR stated that in view of the latest judgment, the appeals of the department be allowed and that of the assessee be dismissed.
8. We have given considerable thought to the issue at hand. We find that the definition of the term tour under Section 65(50) of the Finance Act, 1994 is as under:-
Tour means a journey from one place to another irrespective of the distance between such places.
The definition of tour operator from 1.4.2000 to 9.9.2004 was as under:-
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, 1988 (59 of 1988) or the Rules made thereunder. In 2004, the said definition underwent a change and the position from 10.9.2004 onwards became as under:-
Tour operator means an person engaged in the business of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightseeing 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 (59 of 1988) or the rules made thereunder.
9. A perusal of the above definition would indicate that tour means a journey from one place to another irrespective of distance between such places. The definition of tour operator as was existing before 10.9.2004 included 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 made thereunder. From 10.9.2004, the said definition underwent a change and the new definition has two parts. The second part of the definition is what was being covered prior to 10.9.2004. The first part of the definition which has been added from 10.9.2004 defines as tour operator means any person engaged in the business of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services by any mode of transport). The assessee is not engaged in the business of planning, scheduling, organizing or arranging tours and, therefore, the first part of the definition would not cover them. As far as the second part of the definition is concerned, it is only to place that the person is engaged in the business of operating tours in a tourist vehicle covered by a permit granted by the Motor Vehicles Act or the Rules made thereunder. The same definition was existing prior to 10.9.2004.
10. It will be important to see how the tourist vehicle is defined under the Motor Vehicles Act, 1988. Section 2(43) of the Motor Vehicles Act defines a tourist vehicle as follows:-
Tourist vehicle means a contract carriage constructed or adapted and equipped and maintained in accordance with such specifications as may be prescribed in this behalf. Further, the specification for the tourist vehicle is prescribed under Rule 128 of the Central Motor Vehicles Rules. Thus to charge service tax, the vehicle used for operating tours must meet the said specifications.
11. Since the definition of tourist vehicle contains a further term i.e. contract carriage, it will be important to understand the definition of contract carriage. Contract carriage has been defined under Section 2(7) of the Motor Vehicles Act as under:-
"Contract carriage" means a motor vehicle which carries a passenger or passenger or passengers for hire or reward and is engaged under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorised by him in this behalf on a fixed or an agreed rate or sum--
(a) on a time basis, whether or not with reference to any route or distance; or
(b) from one point to another, and in either case, without stopping to pick up or set down passengers not included in the contract anywhere during the journey, and includes--
(i) a maxicab; and
(ii) a motor cab notwithstanding that separate fares are charged for its passengers.
In addition to contract carriage, there is another type known as stage carriage. Stage carriage is defined under Section 2(40) of the Motor Vehicles Act which reads as under:-
Stage carriage means a motor vehicle constructed or adapted to carry more than six passengers including the driver for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for the stages of the journey.
12. From the above definition, we note that stage carriage and contract carriage are the terms used for the type of operation. Tourist vehicle is a term in which certain specifications have been prescribed under Rule 128 of the Central Motor Vehicles Rules. There are certain broad specifications provided in general for motor vehicles. However, for tourist vehicle, the specifications provided relate to more comfort etc. It is important to note that a vehicle meeting the tourist vehicle specifications can also be used for stage carriage operation. Similarly, vehicles meeting the tourist vehicle specifications can also be used for contract carriage operation. Keeping in view the nature, tours would normally be conducted in a contract carriage and not in the stage carriage operation.
13. We have carefully gone through the Honble Madras High Courts judgment in the case of Secy. Federn. of Bus-operators Assn. of T.N. (supra) which has analysed the whole issue in great detail. The Honble High Court has come to the conclusion that for levy of service tax, the vehicle must meet the specifications of tourist vehicle. The Honble High Court in para 14 of the said judgment has observed as under:-
14. At this juncture, it will be seen that as per Section 2(43) of the Motor Vehicles Act, the Motor Vehicles Rules specifically provide the conditions for a vehicle being recognised as a 'tourist vehicle' under Section 2(43). We can conveniently refer to Rule 128 of the 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 dimension, structure, door arrangement, ventilation, luggage space, seating arrangement, painting and furnishing, lighting, fitting and accessories, etc. In short, Rule 128 specifies the standard of comforts which are required to be there in a vehicle for being recognised as the 'tourist vehicle' under the Central Motor Vehicles Rules. We have, therefore, no hesitation first to hold that the first and foremost condition for a person to be held as a 'tour operator' within the meaning of Section 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 Section 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. The Honble High Court has further analysed that the tourist vehicle must be contract carriage. Thus, if a tourist vehicle is used for stage carriage operation, that will not be taxable under the category of tour operator. The tourist vehicle should be used only as a contract carriage for levy of service tax. We have also gone through the judgments in the case of Gandhi Travels (supra) and Prasanna Travels Pvt. Ltd. (supra). We also note that the Tribunals judgment in the case of Gandhi Travels has been set aside and the matter is remanded back to the Honble Gujarat High Court by the Honble Supreme Court as reported in 2010 (17) STR 513 (SC). We have also gone through the judgment of the Honble Madras High Court in the case of Sri Pandyan Travels (supra). We note that in all the judgments, the basic thing that has been consistently upheld is that the vehicle should meet the specifications of tourist vehicles as specified under Rule 128 of the Central Motor Vehicles Rules. There has been some ambiguity and in some places, the Revenue has tried to interpret the law in a way that all contract carriages are liable to pay service tax under the category of tour operator. Perhaps on the assumption that all contract carriage operations meet tourist vehicle specifications. We do not find this is correct. We note that this Tribunal in the case of Choudhary Yatra Co. Pvt. Ltd. vs. CCE, Nashik reported in 2013 (29) STR 240, has clearly brought out the distinction. Thus, in our view, in the present set of appeals where there is no dispute that the demands are in respect of contract carriage operation alone, one has to see whether the vehicles used were meeting the specifications of tourist vehicle. In some of the impugned orders, we observe that the assessee has given the table indicating the specifications of the ordinary buses of MSRTC and the corresponding specifications for tourist vehicle. Certain certificates have also been produced from independent engineer/persons relating to the specifications of MSRTC buses. In fact the Commissioner (Appeals) in some cases based upon such statement, has allowed the assessees appeals on the grounds that there is nothing to prove that the vehicles are tourist vehicles. We also note that these certificates are general in nature and not specific to the actual vehicles which were given for contract carriage operation. MSRTC will have not only ordinary buses but deluxe buses or luxury basis or air-conditioned buses. Some of these vehicles may or may not be meeting the specifications of tourist vehicle. In view of this position, we consider it necessary to set aside the matter in all the nine appeals and remand the matter to the original authority to examine whether any of the contract carriage operation was carried out by MSRTC using a vehicle which meets the specifications prescribed for tourist vehicle under Rule 128 of the Central Motor Vehicles Rules. In case of any vehicle which meets the said specifications and was used for contract carriage operation, service tax will be payable in that case. In other cases where the vehicle does not meet the specifications or was used for stage carriage operation, no service tax will be leviable.
14. We accordingly set aside the impugned orders in all the nine appeals and remand the matter in above terms. We also note that active co-operation will be required from the assessee to furnish above details as early as possible preferably within a period of three months from the receipt of this order. Assessee is directed to co-operate in furnishing details of vehicle used for contract carriage operation and specifications of such vehicles and also clarify in each case if such vehicles meet tourist vehicle specifications. The cross objections are also disposed of in above terms.
(Pronounced in Court on 30.10.2013) (S.S. Kang) Vice President (P.K. Jain) Member (Technical) tvu 1 12