Custom, Excise & Service Tax Tribunal
M/S S.V.R.Tours And Travels vs C,C.E&St, Hyderabad-Ii on 6 January, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench Division Bench Court I Appeal No.E/25822/2013 (Arising out of Order-in-Original No.27/2012-Adjn(ST)(Commr), dated 23-07-2012 passed by C.C,C.E& S.T., Hyderabad-II) For approval and signature: Honble Ms. Sulekha Beevi, C.S. Member(Judicial) Honble Mr. B. Ravichandran, Member(Technical) 1. Whether Press Reporters may be allowed to see 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 Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s S.V.R.Tours and Travels, Hyderabad ..Appellant(s) Vs. C,C.E&ST, Hyderabad-II ..Respondent(s)
Appearance Shri K.N. Jwala Sr. Advocate and Shri B.Seetharamaih, Advocate for Appellant Ms.Sudha Koka, Addl. Commissioner, AR for the respondent Coram:
Honble Ms. Sulekha Beevi, C.S. Member(Judicial) Honble Mr. B. Ravichandran, Member(Technical) Date of Hearing: 06/01/2016 Date of decision:06/01/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S] The above appeal is filed challenging the impugned order which confirmed the demand of service tax of Rs.1,93,87,293/- along with interest and penalty on the premise that appellant had provided tour Operator Service during the period 01-04-2005 to 31-03-2010.
2. The case was originally disposed by the Tribunal vide Final Order No.20065/2014 dated 101-01-2014 and the appeal was dismissed. The appellant carried the issue in appeal before the Honble High Court of Andhra Pradesh and vide order dated 10-04-2014 in C.E.A. No.52/2014., the Honble High Court set aside the judgment passed by the Tribunal and remanded the matter directing the Tribunal to decide the matter afresh with reasons and finding framing the issues and stipulated a period of three months from date of communication of the order. It is understood that as the appeal was initially disposed by circuit bench and as the bench was not available and due to heavy pendency of matters, the case could not be taken up earlier at the Bangalore Bench of CESTAT, where the matter was pending. After the Regional Bench at Hyderabad started functioning w.e.f 14-12-2015, the case was transferred to Hyderabad and listed for hearing today.
Brief facts:
3. On the intelligence gathered that appellants were evading service tax liability, the department issued summons to the appellants for production of documents. Accordingly they submitted, permits, registration certificate of the vehicle, details of balance sheet for the period 2005-2006 to 2009-2010. After verification and scrutiny of documents, the department entertained the view that appellants have rendered the service of Tour operator service as defined under Section 65(115) of the Finance Act, 1994, during the period 2005-06 to 2009-2010. A show cause notice dated 22-10-2010 was issued invoking the extended period of limitation proposing the demand of service tax of Rs.1,93,87,293/- along with interest and also proposing penalty. After adjudication the order impugned herein was passed confirming the demand, interest and penalty.
4. The arguments advanced by the learned Senior counsel appearing for the appellant is summarized as under:
The appellant is not liable to pay the demand of service tax as the activities of the appellant do not fall within the definition of tour operator service; the buses of the appellant were having a contract carriage permit. They are not tourist vehicles as defined under Section 2(43) of the Motor Vehicle Act, 1988. A contract carriage which is constructed or adapted or equipped or maintained in accordance with specifications prescribed under rule 128 of the central Motor Vehicle rules can alone be called as a tourist vehicle. As per the definition of tour operator firstly, the vehicle used must be a tourist vehicle, secondly, the vehicle must be covered by a permit granted under the Motor Vehicle Act or Rules made thereunder and thirdly the person must be engaged in the business of operating tours. He argued that neither the buses used by appellant are tourist vehicles nor is the appellant engaged in the business of operating tours. The levy of service tax can be attracted only, if the contract carriage is a tourist vehicle and is also granted a tourist permit. The appellant has been granted permits under provisions of Section 74 and Section 88(9) of the Motor Vehicle Act, 1988. The vehicles covered under such permits are not constructed according to specifications prescribed in Rule 128 of Central Motor Vehicle Rules, 1989. The appellant has made requisite payment to the authorities for the class of vehicle registered. But in actual use, the vehicle is operating as a stage carriage. The vehicles are operated to various places like from Shirdi, Hyderabad, Bangalore, Visakhapatnam etc. both intra-state and inter-state transport. He submitted that for travel in the buses the ticket charges are collected separately from individual passengers. The passengers can choose an ordinary bus, deluxe bus, semi-sleeper etc. Further, that the destination of the passengers carried in a single bus vary and the passengers embark and disembark at various stages. The individual fares do not include charges for food or accommodation. The passengers are carried to their destination as per ticket and there is no obligation to carry them back. The appellant is not undertaking any conducted tour operations. The vehicles are used as stage carriages by collecting individual charges from passengers going to different places for different purpose. To substantiate his arguments, the learned counsel relied on various vehicle check reports in which it is noted that individual passengers are picked up from different places for individual purpose of journey and tax has been collected per seat as in the case of a stage carriage; that the appellant is not engaged in the business of operating tours by tourist vehicles; that the impugned order is passed without addressing this basic issue and that the same is not sustainable. As an alternative plea, he submitted that the impugned service are exempted service during the relevant period as per notification No.20/2009-ST dated 07-07-2009.
5. Per Contra, the learned AR Ms. Sudha Koka supported the findings in the impugned order. She submitted that as per the definition, the use of contract carriage would fall into the category of tour operator if the contract carriage has a permit other than a stage carriage permit. She laid much thrust on the observations made by Honble High Court of Madras in the case of Secretary Federation of Bus Operators Association of Tamil Nadu Vs Union of India reported in 2006(2) STR 411(Mad) and also in Sri Pandyan Travels Vs CCE, Chennai reported in 2006(3) STR 151(Mad). Since the tour is defined as a journey from one place to another irrespective of the distance between such places; there is no requirement for planning etc. for such tour. The appellant did undertake such tour and hence liable to service tax. She also contested that the vehicles check reports by RTA cannot be relied to categorise the vehicles as stage carriers.
6. We have heard both the sides and examined the appeal records. The points for consideration are
a) whether or not the appellants are liable to service tax under the category of tour operator service during the period 2005-06 to 2009-10;
b) to decide the issue at (a) above, the consideration is whether or not the appellant is within the scope of term tour operator as per Section 65(115) of Finance Act, 1994 for the period prior to and also post amendment by Finance Act, 2008;
c) whether or not the appellant is engaged in the business of operating tour in a tourist vehicle (upto 2008), tourist vehicle/contract carriage (post 2008);
d) whether or not the activity sought to be taxed at the hand of the appellant will be covered under the term tour in terms of Section 65(113) of Finance Act, 1994; and
e) the sustainability of demand for extended period and imposition of penalty.
7. As can be seen the findings on points (b) to (d) above will answer the question at (a).
8. The disputed period in the present case falls within the period prior to the amendment brought forth in 2008 and also after the amendment. We find that definitions for tour operator during the relevant time are as below:-
Section 65(115) Tour Operator means any person engaged in the business of planning, scheduling, organising 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 rules made under the Motor Vehicles Act, 1988 (59 of 1988) or the rules made thereunder;
The above definition was amended vide Finance Act, 2008 as below:-
Section 65(115) Tour Operator means any person engaged in the business of planning, scheduling, organising 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 or a contract carriage by whatever name called, covered by a permit, other than a stage carriage permit, granted under the Motor Vehicles Act, 1988 (59 of 1988) or the rules made thereunder;
9. The appellants contention is that he is not a tour operator. He is not involved in the business of planning, scheduling, organising or arranging tours by any mode of transport. The learned counsel for the appellant strongly contested the finding of the original authority that they are tour operators. On this issue, the learned AR argued that prior to 2008 the appellants are covered under the inclusive portion of the definition which states that any person engaged in the business of operating tours in a tourist vehicle will be a tour operator. Post-2008 any person operating tours even in a contract carriage by whatever name called covered by a permit, other than stage carriage permit granted under the Motor Vehicles Act, 1988 and rules made thereunder shall be considered as a tour operator. The learned AR thus submitted that for the whole period of demand, the appellant is to be considered as a tour operator as they have been operating tours in a tourist vehicle/contract carriage vehicle. We find that this contention requires close scrutiny.
10. First, we take up the reliance place by the learned AR on the decision of Honble Madras High Court in the case of Secretary, Federation of Bus-operators Association of Tamil Nadu Vs. UOI [2006(2) STR 411 (Mad.)]. It is seen that the Honble High Court held 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 vehicles and therefore necessarily such vehicle must conform to the conditions prescribed under Rule 128 of the Central Motor Vehicles Rules. In this connection, we find that the documents submitted by the appellant regarding registration/permit of the vehicles indicate them as contract carriage issued under Rule 174(iii) of the Andhra Pradesh Motor Vehicles Rules, 1989. There is no mention about permission to operate as a tourist vehicle. As per Section 2(43), a vehicle can be a tourist vehicle only when it conforms to the specifications prescribed under Rule 128 of Central Motor Vehicles Rules. Here the department has no case that the buses of the appellant conform to such specifications. The original authority in his order stated that when a contract carriage is given all India permit to conduct tour it will imply that the buses conformed to the specification of the tourist vehicles. We find that such assertion should be supported by evidence. As can be seen from the provisions of Motor Vehicles Act, 1988, the tourist vehicle defined as per the Section 2(43) means a contract carriage constructed or adopted and equipped or maintained in accordance with such specification as may be prescribed in this behalf. As such, to be called as a tourist vehicle, the contract carriage should satisfy the specification as stipulated above. Otherwise a specific certification by the competent authority categorising the vehicle in terms of above provisions as tourist vehicle is required. The original authoritys conclusion based on implication is not tenable. The decision of Honble Madras High Court as above is relevant here. Now it is clear that prior to amendment made in 2008, the appellant would not fall into the category of tour operator as the vehicles are not tourist vehicles. Again the definition of tour operator has two segments. One in the first portion dealing with person engaged in the business of planning, scheduling etc. of tours by any mode of transport and secondly the inclusive portion of the definition covering any person engaged in the business of operating tours in a tourist vehicle. We find that prior to 2008 amendment, there is no evidence with supporting documents to sustain the case of department that the appellant operated tours in a tourist vehicle.
11. Now we will refer to the situation post-2008. After 2008, the definition was extended to cover tour operation in any vehicle other than stage carriers. Even here the appellants have produced evidence to the effect that though they were permitted as contract carriers they were operating more as stage carriers for passengers. For this they relied on various check reports made by Regional Transport Authority while checking their vehicles in different routes. They have been taxed in the category of stage carriers in view of such test/check reports. The learned AR contested this on the ground that these check reports only indicate the violation of terms of permit given to appellant and does not establish the appellant to be a stage carrier. Against this, the learned counsel for the appellant submitted that they have produced these evidences only to show that they are not operating any tour for people. They were licensed to ply between pre-approved destinations with pre-fixed fare. There is no common intent of the travelling passengers. In other words, each passenger embarks and disembarks the vehicle as per their intent and on payment of fare due.
12. The Tribunal in the case of CCE, Bhopal Vs. Suresh Kumar Advani [2014(35) STR 138 (Tri. Del.)] examined the scope of tourist vehicle. The Tribunal held that the tourist vehicles are to be vehicles which are covered in terms of Section 2(43) of Motor Vehicles Act read with Rule 128 of the Central Motor Vehicle Rules and the tour operator should be accordingly considered. Similar issue was decided by the Tribunal in the case of Choudhary Yatra Co. Ltd. Vs. CCE, Nashik [2013(29) STR 240 (Tri. Mumbai)] wherein it was held that tourist vehicles are thus covered under Clause 43 of Section 2 of Motor Vehicles Act, 1988 conformed to the specifications of Rule 128 of the Central Motor Vehicles Rules, 1988.
13. This brings us to another important aspect of the definition of tour. Section 65(113) defines tour as a journey from one place to another irrespective of the distance between such places. From this, it is apparent that the person travelling in the bus is undertaking a tour. This by itself does not imply the appellant becomes a tour operator for different passengers boarding the bus for same or different destination paying different fare. The activity is more akin to transporting passengers from one place to another rather than operating a tour. The proposition which is for consideration is that any person operating a tour using a vehicle other than stage carrier will make that person who is transporting the passenger as a tour operator. We find as the definition of tour operator even if it is taken in two parts cannot apply to a situation where the travelling public use transport facility on payment of a fare with no other operation on the part of the appellant.
14. The definition of tour operator post-2008 can be split up into two parts for better appreciation.
Tour Operator means --
Any person engaged in the business of planning, scheduling, organising 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 or a contract carriage by whatever name called, covered by a permit, other than a stage carriage permit, granted under the Motor Vehicles Act, 1988 (59 of 1988) or the rules made thereunder;
(emphasis supplied) The definition implies something more than ordinary travel or transport undertaken. In a situation where admittedly the appellant is transporting different persons with prefixed fair to different destinations in the same vehicle without a common contract, the activity will be more akin to transport of passengers rather than operating tour. More so, when we consider the definition of contract carriage, it is clear that the vehicle engaged should travel without stopping to pick up or set down, anywhere in the journey, passengers not included in the contract. The facts as pleaded in the case show such nature of transport is not being undertaken by the appellant. It is not established by Revenue by evidence, except going by the nature of the permit given to the vehicle owner. Here, for instance thirty different persons undertaking a travel for different distances though in the same vehicle paying prefixed fare cannot come under the business of operation of tour using such vehicle.
15. The learned AR relied on the statement dt. 12/10/2010 of the proprietor to state that the appellant had operated buses from Hyderabad to Shirdi and the service included accommodation and as such he is covered by the term tour operator. The learned counsel for the appellant states that a copy of the statement was not provided to them. However, he submits that the appellant did make some attempt to have such arrangement of accommodation but did not succeed and as such the operations did not take off. We find the assertion based on the statement is not corroborated and even otherwise such statement, if any, made by appellant cannot be extended to all the activities of appellant carried out for different destinations. There is absolutely no evidence to show that appellant made arrangements of accommodation to any destination. After perusing the facts and evidence presented before us and applying the law, we are of the considered view that the demand is unsustainable.
16. In the result, the impugned order is set aside. The appeal is allowed with consequential reliefs, if any.
(Operative part of this order was pronounced in the court on conclusion of hearing) (B. RAVICHANDRAN) MEMBER(TECHNICAL) ( SULEKHA BEEVI, C.S.) MEMBER(JUDICIAL) Raja..
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