Customs, Excise and Gold Tribunal - Tamil Nadu
T.N. State Trans. Corpn. (Kumbakonam) ... vs C.C.E. on 28 December, 2006
Equivalent citations: 2007[6]S.T.R.322, [2007]8STT98, (2008)13VST495(CESTAT-CHENNAI)
ORDER P. Karthikeyan, Member (T)
1. In the instant stay application the appellants M/s. Tarn-ilnadu State Transport Corporation (Kumbakonam) Ltd., Trichy, prays for waiver of pre-deposit and stay of recovery of demand of Service Tax for the tour operators' service rendered by the appellants between 10/2004 to 12/2005 and penalties imposed on it. Service Tax of Rs. 8,94,369/- had been demanded by the joint Commissioner as original authority in his order dated 9-8-2006. He had also imposed an equal amount as penalty under Section 78 on the appellants. A penalty of Rs. 1000 was imposed under Section 77 and penalty @ Rs. 100 per day for the delay in payment of the tax due under Section 76. The order also had demanded interest at the appropriate rate under Section 75 of the Finance Act 1994. In the impugned order the Commissioner (Appeals), Trichy has affirmed the demand of tax and the penalties imposed in the original order.
2. The facts of the case are that M/s. BHEL and the appellants have entered into a contract in terms of which the appellants deployed their buses for transport of BHEL employees to the factory and back. Transport of BHEL staff takes place in trips arranged/scheduled by the appellants to suit the requirement of staff of BHEL. The tour operator service has been re-defined effective from 10- 9-2004 in terms of Section 65(115) of the Finance Act. As per the revised definition "tour operator means any person engaged in the business of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, site seeing or similar services) by any mode of transport and includes any person engaged in the business of operating tourist vehicle covered by a permit granted under the Motor Vehicles Act 1988 (59 of 1988) or the Rules made thereunder". The Commissioner found that from 10-9-2004 onwards any person engaged in the business of planning, scheduling, organizing or arranging tours by any mode of transport was covered within the purview of tour operators' service in addition to the service providers covered by the definition existed prior to 10-9-2004. He found that the activity of the appellants involved planning, scheduling, organizing or arranging of tours in their buses and such activity was covered under the new definition of tour operators. Accordingly, he upheld the order of the original authority.
3. The Ld. Counsel representing the appellants submits that the scope of the service after the amendment was clarified by Circular No. 80/10/04 S.T. dated 17-9-2004 of the CBEC in its para 20. According to the said clarification, prior to the amendment, the service had covered package tour operators, which involved package tours covering mode of transport other than road. Levy on tour operators engaged in operating tourist vehicles continued even after amendment. The scope of levy was expanded by removing the limitation regarding transportation by tourist vehicles only in the case of package tours. The Ld. Counsel submitted that the appellants were not operating tourist vehicles but employed regular public transport buses for transport of BHEL employees. The above activity did not come within the scope of the levy as amended.
4. Ld. SDR submitted that the tax demanded did not relate exclusively to transport of BHEL staff as per the contract but also tours organized by the appellants transporting private persons to attend marriages at places where marriage halls were located. The Ld. Consultant submitted in a rejoinder that in such cases the individuals took separate tickets as per the tariff applicable to the general public for the journey.
5. Heard both sides. The tour operator as defined with effect from 10-9-2004 is a person engaged in the business of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sight seeing or other similar services) by any mode of transport and includes any person engaged in the business of operating tour in a tourist vehicle covered by a permit granted under the Motor Vehicles Act 1988 (59 of 1988) or the Rules made there under. When the revised definition of tour operator was brought into force, the CBEC had issued the following clarification.
At present, tour operator service covers package tour operators also. However, under the present definition, such package tours attract service tax only if such tours involve modes of transport other than road (say a combination of air-rail-cab travel). The definition of tour operator has been suitably expanded. While the existing levy on tour operators engaged in operating tours in tourist vehicles remains as such, in case of a package tour (which are planned, scheduled, organized or arranged by tour operators), the scope of levy is being extended by removing the limitation regarding transportation by tourist vehicles only. Such tourist operators would be subjected to service tax irrespective of the mode of transport used during such tours. The abatements (Notification No. 39/97-ST) in case of package tour operators (providing transportation and accommodation) would remain at 60%.
As per the clarification, the tax till then had not applied to package tours, which involved transport by road alone. The revised definition made the tax applicable as regards package tours organized also with vehicles other than tourist vehicles. A perusal of the definition and clarification does not appear to bring the activity of the appellants under the coverage of tour operator service. Transport of employees from different places to a common destination like a place of work, such as a factory in the instant case and bringing them back on a daily basis does not appear to be planned, scheduled, organized, arrangement of tours using the buses of the appellants. The appellants have therefore made out a prima facie case against the demand and penalties imposed on them. Accordingly, there will be complete waiver of pre-deposit and stay of recovery of the dues and penalties affirmed in the impugned order till final disposal of the appeal.
(Dictated and pronounced in open Court)