Custom, Excise & Service Tax Tribunal
Office Of The Deputy Conservator Of ... vs Bhavnagar on 26 September, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
AHMEDABAD
REGIONAL BENCH, COURT NO. 3
SERVICE TAX APPEAL NO. 11413 OF 2016
[Arising out of OIO-BVR-EXCUS-000-COM-032-15-16 dated 06/11/2015 passed by
Commissioner of Central Excise-BHAVNAGAR]
OFFICE OF THE DEPUTY CONSERVATOR OF FORESTS Appellant
Wildlife Division, Sasan Gir,
Sinh Sadan, Sasan,
Junagadh,
Gujarat
Vs.
COMMISSIONER OF CENTRAL EXCISE-BHAVNAGAR Respondent
Plot No.6776/B-1...Siddhi Sadan, Narayan Upadhyay Marg, Beside Gandhi Clinic, Near Parimial Chowk, Bhavnagar, Gujarat-364001 WITH SERVICE TAX APPEAL NO. 11955 OF 2018 [Arising out of OIA-BHV-EXCUS-000-APP-273-2017-18 dated 11/04/2018 passed by Commissioner of Central Excise and Service Tax-SERVICE TAX - AHMEDABAD] OFFICE OF THE DEPUTY CONSERVATOR OF FORESTS Appellant Gir Forest, Sinh Sadan, Sasan, Junagadh, Gujarat Vs. COMMISSIONER OF CENTRAL EXCISE-BHAVNAGAR Respondent Plot No.6776/B-1...Siddhi Sadan, Narayan Upadhyay Marg, Beside Gandhi Clinic, Near Parimial Chowk, Bhavnagar, Gujarat-364001 AND SERVICE TAX APPEAL NO. 12032 OF 2019 [Arising out of OIO-BVR-EXCUS-000-COMM-9-2019-20 dated 03/05/2019 passed by Commissioner of Central Excise, Customs and Service Tax-BHAVNAGAR] OFFICE OF THE DEPUTY CONSERVATOR OF FORESTS Appellant Gir Firest, Sinh Sadan, Sasan Junagadh, Gujarat Vs. COMMISSIONER OF CENTRAL EXCISE-BHAVNAGAR Respondent Plot No.6776/B-1...Siddhi Sadan, Narayan Upadhyay Marg, Beside Gandhi Clinic, Near Parimial Chowk, Bhavnagar, Gujarat-364001 Appearance:
Shri Jigar Shah & Amber Kumrawat Advocates for the Appellant Shri Rajesh Nathan, Assistant Commissioner (AR) for the Respondent Page |2 ST/11413/2016, ST/11955/2018 & ST/12032/2019-DB CORAM: HON'BLE MR. RAMESH NAIR, MEMBER ( JUDICIAL ) HON'BLE MR. C. L. MAHAR, MEMBER ( TECHNICAL ) FINAL ORDER NO. 12202-12204/2024 Date of Hearing : 25.07.2024 Date of Decision : 26.09.2024 RAMESH NAIR The Deputy Conservator of Forest (hereinafter referred to as the "Appellant") is the person-in-charge of the Wildlife Division, Sasan- Gir in the district of Junagadh working under the Ministry of Forest & Environment, State of Gujarat which is responsible for maintaining and preserving the forests of the Gujarat. The Gir Forest in the State of Gujarat is the only natural habitat of Asiatic Lions. In order to protect the natural habitat and conserve the Asiatic Lions, the Government of Gujarat vide its resolution (by Forest & Environment Department No. WLP- 102000/S.F.- 12/G-1 dated 13.02.2007 constituted a society called the "Gujarat Lion Conservation Society". The tourists are allowed to enter the Gir Forest subject to the permits granted by the Ministry of Forest & Environment during specified days and time period. Further, the tourists are allowed to enter the forest area in permitted vehicles only. However, the Appellant has no role in arranging the vehicles for the tourists, the tourists are required make their own arrangements of vehicles from the local vehicle owners who are permitted by the Forest Department of Gujarat. The Appellant also charges the tourists for any videography or photography in the forest area. The Devaliya Gir Interpretation Park is a facility of a particular eco-tourism zone that has been created to reduce the overload of tourists from the Gir Forest and also provide the tourists the opportunity of viewing lions and other animals in their natural habitat. The Appellant issues permits to the tourists to enter the Devaliya Park also. Further, the Appellant also provides government buses to the tourists to facilitate their visit to the Devliya Park.
Page |3 ST/11413/2016, ST/11955/2018 & ST/12032/2019-DB Further, the Government of Gujarat has also setup a guest house at Sasan, District Junagadh to facilitate the stay of tourists in the forest area and charges them for the same. The Central Excise & Service Tax Officers investigated the operations of the Appellant at the Gir National Park and Gir Devaliya Park and came to the conclusion that the Appellant is liable to pay Service Tax under the categories of "Hotel and other Accommodation Services" and "Tour Operator Services" for services provided by it to the tourists. In pursuance of the investigations carried out by the Central Excise Officers, the Appellant was issued three Show Cause Notices dated 10.10.2014, 14.03.2016 & 22.03.2018 covering the period of F.Y. 2009-10 to June 2017 proposing to recover Service Tax under the aforesaid categories along with the applicable interest and penalty. The Appellant, replying to the above Show Cause Notices, made detailed submissions denying all the allegations made by the Department vide letters dated 14.11.2014, 30.12.2016 and 07.05.2018. The above Show Cause Notices were adjudicated upon by the Commissioner of Central Excise, Bhanvnagar (hereinafter referred to as the "Ld. Commissioner"). However, the Ld. Commissioner, ignoring the submissions made by the Appellant confirmed the demand of Service Tax along with the proposed interest and penalty and passed the Orders-in-Original dated 06.11.2015, 28.02.2017 and 03.05.2019. Against the Order-in-Original dated 28.02.2017, the Appellant filed an appeal before the Commissioner of Central Excise (Appeals), Rajkot (hereinafter referred to as the "Ld. Commissioner (Appeals). However, the L.d. Commissioner Appeals confirmed the demand of Service Tax along with the proposed interest and penalty vide Order-in- Appeal dated 16.03.2018.
For the ease of reference, the Order(s)-in-Original dated 06.11.2015 and 03.05.2019 and the Order-in-Appeal dated 16.03.2018 are hereinafter collectively referred to as the "Impugned Orders". The Appellant, being aggrieved by the Impugned Orders has preferred the present appeals on the detailed grounds as raised in the appeal memo.
Page |4 ST/11413/2016, ST/11955/2018 & ST/12032/2019-DB
2. Shri Jigar Shah learned counsel with Shri Amber Kumrawat learned advocate appearing on behalf of the appellant made the following submissions:-
"The case of the Appellant is squarely covered by decisions of the Hon'ble CESTAT New Delhi and the Commissioner of Central GST (Appeals), Rajkot, A.1. The Appellant at the outset submits that a similar issue of demand of Service Tax under the category of "Tour Operator Services" on permits issued by the Deputy Conservator of Forest, Ranthambore arose before the Hon'ble CESTAT New Delhi in the case of Deputy Conservator of Forest and Field Director v. CCE, Jaipur, 2018 (4) TMI 777-CESTAT NEW DELHI. The Hon'ble CESTAT in the said case observed that the demand of Service Tax under the category of "Tour Operator Services" was not sustainable on the ground that the activities carried out by the Appellant were a statutory duty. Therefore, the amount recovered by the Appellant was a fee that was collected as per the provisions of the relevant statute for performance of its statutory functions and the same cannot be considered as a consideration for purposes of organizing a tour.
A.2. In light of the above decision, it is submitted that the Appellant cannot be made liable to pay Service Tax on the amount collected by it from the tourists in furtherance of discharging a statutory function.
A.3. The Appellant also relies on a decision given by the Ld. Commissioner of Central Tax (Appeals), Rajkot wherein on similar facts and circumstances, the Ld. Commissioner dropped the proceedings initiated against the Appellant in that case.
A.4. Therefore, the Impugned Orders are liable to be set aside on this ground alone.
B. The Appellant is a statutory authority and has discharged a sovereign function which cannot be brought under the Service Tax net.
B.1. It is submitted that the Appellant is an employee of the Government of Gujarat who is entrusted with the job of conservation of Gir Forest. The collection of charges in the nature of permit fees from various tourists is a duty of the Appellant as an employee and is a part of the job carried out by it for the Government. The Appellant is carrying out a specific responsibility entrusted to it under the law in force. It is therefore submitted that the Appellant is discharging a sovereign function and the same cannot be brought under the Service Tax net.
B.2. Further, the Appellant places reliance on the CBEC Circular No. 89/7/2006-ST dated 18.12.2006 and Master Circular dated 23.08.2007 wherein it has been clarified that the activities carried out by sovereign/public authorities under the provisions of the relevant statute are pure statutory functions and cannot be treated as services provided for a consideration. Therefore, any amount collected as a fee is in nature of a compulsory levy and not a consideration for the purpose of levy of Service Tax.
Page |5 ST/11413/2016, ST/11955/2018 & ST/12032/2019-DB B.3. The same view was reiterated in the FAQs dated 04.12.2008 and 01.09.2010 issued by the DGST.
B.4. To substantiate the above contention, the Appellant further places reliance on the following decisions wherein it has been categorically held that any activity performed by a State organ to discharge a statutory function or a sovereign activity cannot be brought under the ambit of Service Tax.
a) Krishi Upaj Mandi Samiti, New Mandi Alwar v. CCE & ST, Alwar, 2022 (2) TMI 1113
b) CCE, Hyderabad v. CMC Ltd., 2007 (7) STR 702 (Tri.-Bang.)
c) Electrical Inspectorate, Govt. of Karnataka v. CST Bangalore, 2008 (9) STR 494 (Tri-Bang.) d) CCE v. CS Software Enterprise Ltd., 2008 (10) STR 367 (Tri.- Bang.)
e) Maharashtra Industrial Development Corporation v. CCE, 2014-TIOL-
2022-CESTAT-MUM B.5. There is no doubt that the charges collected by the Appellant are in the nature of a fee and that the Appellant was discharging a sovereign function ie. conservation of forest on behalf of the Government of Gujarat. Therefore, it is submitted that the Appellant cannot be subjected to the levy of Service Tax B.6. In view of the aforesaid submission, the Impugned Orders are liable to be set aside.
C. The Ld. Commissioner has erroneously held that the Appellant is a Society of the Government.
C.1. It is submitted that the Ld. Commissioner and the L.d. Commissioner (Appeals) both had erroneous understanding of the facts as they had observed that the Appellant was rendering the Appellant in the capacity of a trust and not as a government authority and was therefore, liable to pay service tax C.2. It is submitted that the Gujarat State Lion Conservation Society had no role in issuing permits to the tourists. The Society in fact has no authority to issue such permits. The Appellant is therefore, not a Society or a Trust but, an authority who has been authorized by the government to issue permits to its visitors.
C.3. Therefore, Impugned Orders are liable to be set aside on this ground also.
D. The alleged consideration for the services has been directly credited to the Consolidated Funds of the State of Gujarat. The Central Government has no power to tax the income of the State Government.
D.1. The State Government is the authority for protection and conservation of the forests within its geographical territory. The fees collected by the Appellant as an employee of the Government of Gujarat and in discharge of Page |6 ST/11413/2016, ST/11955/2018 & ST/12032/2019-DB its sovereign function is credited to the Consolidated Fund of the State of Gujarat.
D.2. As per Article 246(3) of the Constitution of India, the legislature of any state has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule to the Constitution of India.
D.3. Therefore, the Appellant submits that only the Government of Gujarat has power to levy such charges and the Central Government cannot make any law to levy tax on the statutory charges collected by the State Government. This position has also been upheld by the Hon'ble CESTAT Mumbai in its recent decision in Konkan Railway Corporation Ltd. v. CST, 2023- VIL-873-CESTAT-MUM-ST.
D.4. Since, in the present case, the levy of service tax is sought to be levied on the income of the State Government which is not permitted under the Constitution of India, the Impugned Orders are liable to be set aside.
E. Without prejudice to the above submissions, the Appellant has not provided any service in the nature of a "tour operator". Therefore, the demand of Service Tax under the category of "Tour Operator Services" is not sustainable for the period up to 30.06.2012.
E.1. The Appellant submits that the demand of Service Tax under the category of "Tour Operator Services" is not sustainable for the period up to 30.06.2012.
E.2. The definition of "tour operator" as amended through the Finance Act, 2008, is reproduced below:
""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 or the rules made thereunder Explanation, For the purpose of this clause, the expression "tour" does not include a journey organized or arranged for use by an educational body than a commercial training or coaching centre, imparting skill or knowledge or lessons on any subject or field;"
E3. The scope of the above services was further clarified by CBEC vide Circular D.O.F 334/1/2008-TRU dared 29.02.2008 wherein the CBEC clarified that a tour operator is requined to conduct the tour in permitted motor vehicles only.
E.4. It is submitted that the Appellant had not provided any vehicles to the tourists. The Appellant only facilitates the tourists through Government buses to visit Gir Interpretation Park and not otherwise. This fact has also been accepted and appreciated by the L.d. Commissioner which is sufficient to delete the entire demand against the Appellant under the head of "Tour Operator Services". The definition and CBEC Circular also make it clear that a Page |7 ST/11413/2016, ST/11955/2018 & ST/12032/2019-DB tour operator must provide services in permitted motor vehicles. As the Appellant is not providing any motor vehicles to the visitors other than to visit Gir Interpretation Zone, Devaliya in government buses, it cannot be categorized as "Tour Operator" at all.
E.5. The above submissions of the Appellant are fortified by the view expressed by Hon'ble CESTAT New Delhi in case of Cox & Kings India Ltd., 2014 (35) STR 817 (CESTAT-New Delhi) wherein, it was held that if the assessee has not provided the services in any tourist vehicle then, the assessee cannot be classified as a tour operator.
E.6. Further, up to 30.06.2012, each and every category of taxable service was defined in Finance Act 1994. Until and unless the activities carried out by any person were not falling within the four corners of the definitions as provided in Finance Act, 1994 the activities were not taxable.
E.7. It is submitted that the activities carried out by the Appellant like issuing permits for entering into the forest, issuing tickets to Devaliya Park, camera fees, videography fees etc. did not fall in any of the specified categories of services and taxable services. Therefore, the Appellant submits that their activities were not taxable up to 30.06.2012.
E.8. Therefore, it is submitted that the activities of the Appellant cannot be classified as that of a "tour operator" for the period upto 30.06.2012. The demand of Service Tax should be dropped on this ground itself.
F. The Appellant is not liable to pay Service Tax under the negative list regime w.e.f. 01.07.2012 as the services provided by the Government are excluded under the statute.
F.1. With effect from 01.07.2012 the negative list regime was introduced in Finance Act 1994. The new charging section 66B of the Finance Act 1994, reads as under.
"Section 66B- Charge of service tax on and after Finance Act, 2012- There shall be levied a tax (hereinafter referred to as the service tax) at the rate of fourteen per cent on the value of all services, other than those services specified in the negative list. provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed."
F.2. It can be observed from the above charging section that if the activity is enlisted in to the negative list of services then charging section itself is not applicable to that activity.
F.3. It is submitted that the services provided by government or a local authority are specifically mentioned in the negative list as enumerated in Section 66D of the Finance Act, 1994.
F.4. The Appellant relies on the Education Guide dated 20.06.2012 issued by the CBEC wherein it was clarified that "Government" includes the Departments and Offices of the Central or the State Government or the UT Administrations which carry out the functions in the name and by the order of the President of India or the Governor of the State.
Page |8 ST/11413/2016, ST/11955/2018 & ST/12032/2019-DB F.5. It is an undisputed fact that the Appellant is an officer/ employee of the Government of Gujarat and was carrying out its activities in that capacity only. Also, the fees collected by the Appellant gets deposited in the Consolidated Government Fund only and i F.6. Therefore, it is submitted that the activities of the Appellant are covered under negative list. Thus, the Appellant cannot be made subject to the demand of Service Tax.
G. Without prejudice to the above submissions, it is submitted that the Appellant has been wrongfully impleaded as a party to the proceedings.
G.1. It is submitted that the Appellant has been wrongfully impleaded as a party to the proceedings. Even if the Department has a valid case, the same should be against the Government of Gujarat and not the Appellant.
G.2. It is submitted in this regard that the Appellant is a mere employee of the Government of Gujarat and discharging its obligation on behalf of the government in that capacity. Further, the fact that the Government of Gujarat is the ultimate beneficiary of the fee collected by the Appellant cannot be ignored.
G.3. The Appellant relies on decision of CCE v. Divisional Railway Manager, 2014-TIOL 2576-HC-ALL-ST, wherein it has been categorically held that a Divisional Railway Manager who is an employee of the Union of India or the Ministry of Railways cannot be impleaded as a party to a proceeding because the said officer is acting merely as an employee or servant on behalf of the Ministry. Therefore, the Union of India should be made the party through the Ministry of Railways and not the Divisional Railway Manager.
G.4. In order to substantiate above preposition, the Appellant also places reliance on the following decisions:
a) Divisional Railway Manager v. CCE, 2014 (34) STR 297 (T)
b) The Commandant Home Guard Training Centre v. CCE, 2019 (10) TMI 47- CESTAT
c) Mumbai Police v. CST, 2018 (4) TMI 418-CESTAT G.5. Therefore, in the Appellant's case too, the Appellant has been wrongfully made a party to the proceedings instead of the Government of Gujarat G.6. On this ground alone, the entire proceedings against the Appellant are liable to be set aside.
H. Without prejudice to the above submissions, it is submitted that the demand of Service Tax under the head of "Accommodation in Hotel Service" cannot be sustained prior to 01.04.2011.
H.1. It is submitted that by the Appellant that the category of "Accommodation in Hotel Service" was introduced in the Finance Act, 1994 by way of the amendment vide Finance Act, 2011 with effect from 01.04.2011. Therefore, the demand under that category could only be raised Page |9 ST/11413/2016, ST/11955/2018 & ST/12032/2019-DB after the said date. However, the Department sought to tax the Appellant under the said category from the F.Y. 2009-10 which is not sustainable.
H.2. Therefore, the demand of Service Tax under the category of "Accommodation in Hotel Service" is not tenable at all to that extent and is therefore, liable to be dropped.
I. Without prejudice to above submissions, in any case demand of service tax under each of the categories for the period post 2012 cannot be sustained in present case because the Ld. Commissioner has relied upon the definition of taxable services as existed prior to 01.07.2012.
1.1. The Appellant submits in present case that demand of Service Tax is based on the definition of services as existed prior to 01.07.2012. However, the entire period of dispute in Show Cause Notices dated 14.03.2016 and 22.03.2018 falls after 01.07.2012. The demand of Service Tax on the definition based in erstwhile regime cannot be confirmed. The Show Cause Notices have failed to analyse the transactions properly and mechanically raised the demand of Service tax. In this regard reliance is placed on the following decisions:
a) Reynolds Petrochem Ltd. v. CCE & ST, Surat, 2022 (7) TMI 656-CESTAT AHMEDABAD
b) Maharashtra Industrial Development Corporation, 2014 (36) STR 1291 (Tri- Mum)
c) Frisco Foods Pvt. Ltd. Vs. CCE, Dehradun 2022-VIOL-49-CESTAT-
Del-ST J. Without prejudice to the aforesaid submissions, computation of liability is incorrect.
1.1. Relying on the decision of CCE v. Maruti Udyog Ltd., 2002 (49) RLTI (SC), it is submitted that even if it is assumed that the service tax as alleged is payable by the Appellant, the manner of calculation of the liability is not correct. The consideration which the Appellant had received was inclusive of the service tax payable. In the case of excise duty also, it has been held that the amount received should be taken as cum-duty price and the value should be derived therefrom, by excluding the duty alleged to be payable as required under Section 4(4)(d)(1) of the Central Excise Act, 1944, K. The demand is time barred, K.1. The Show Cause Notice 10.10.2014 was issued to the Appellant invoking the extended period of limitation on the allegation that the Appellant had suppressed facts from the Department with the intention to evade tax.
K.2. The Appellant submits that the entire activity carried out by the Appellant was in knowledge of the Department; therefore, there was no suppression of facts with an intention to evade. The Appellant submits that there should be positive act on the part of the Appellant to evade payment of tax. Mere non-payment of tax is not enough to allege that the Appellant was guilty of suppression of facts.
P a g e | 10 ST/11413/2016, ST/11955/2018 & ST/12032/2019-DB K.3. Further, the Show Cause Notice also did not bring any evidence on record to show that there was suppression of facts and has only made bald allegations of suppression. In view of this, it is submitted that the Show Cause Notice was barred by time.
K.4. In order to substantiate above submission reliance is placed on the following decisions:-
a) Nizam Sugar Factory v. CCE, 2006 (197) ELT 465 (SC)
b) Pushpam Pharmaceuticals Company v. CCE, 1995 (78) ELT 401
c) GD Goenka Pvt. Ltd. v. CCE, 2023 (8) TMI 995 L. Appellant cannot be made subject to penalty.
L.1. It is humbly averred that it is a settled principle of law that where is no demand of duty. penalty cannot be imposed. The Appellant has rightly paid service tax on the door to door transportation services and therefore, no penalty can be imposed. Further, the present issue involves interpretation of complex laws and the default, if any, was solely on account of bona fide belief that the Appellant was not liable to pay service tax.
L.2. It is also submitted that the Show Cause Notice has not given any reason for imposition of penalty under Section 78 of the Act, neither has the Department brought any evidence which can establish that the Appellant has suppressed anything from the Department. Therefore, the Appellant cannot be said to have had intention to evade tax by suppressing facts.
L.3. The Appellant further submits that no penalty can be imposed under Section 77 of the Finance Act, 1994 as none of the conditions specified therein have been met and therefore the proposal to levy penalty under Section 77 is without basis and does not stand scrutiny.
L.4. It is further submitted that the Show Cause Notice issued by the Department involve issues related to interpretation of provisions of service tax law. Where questions of law and fact are to be decided, penalty cannot be imposed. Further, Section 80 also provides that no penalty can be imposed on the assessee if the failure under Sections 76, 77 or 78 is due to reasonable cause. Hence, penalty cannot be imposed on the Appellant.
M. No interest is payable.
M.1. It is submitted by the Appellant that when demand of service tax proposed to be imposed is itself not sustainable, the question of interest on such demand cannot arise.
16. In view of the above, it is humbly submitted that the Impugned Order passed by the Ld. Commissioner is erroneous in the eyes of law and is therefore, liable to be set aside."
3. Shri Rajesh Nathan learned Assistant Commissioner AR appearing on behalf of the revenue reiterates the finding of the impugned orders.
P a g e | 11 ST/11413/2016, ST/11955/2018 & ST/12032/2019-DB
4. On careful consideration of submissions made by both the sides and perusal of records. We find that the present issue is no longer res-integra as absolutely identical cases have been decided by this tribunal as cited by the learned counsel. One of the direct relevant case reported at Deputy Conservative of Forest Vs. CCE 2019 (20) GSTL 355 (T) is reproduced below:-
"These two appeals are against Order-in-Original No. 23-24/2011, dated 30- 3-2011. The appellant comes under Department of Forests, Govt. of Rajasthan and exercised the jurisdiction and control over the Tiger Project, Ranthambore, Sawai Madhopur, Rajasthan. The Revenue noticed that the appellant was collecting certain amounts from the tourists for organizing or arranging tours into the forests on Vehicles which were allowed on specified routes. Out of the amounts so collected, a certain portion was paid to the vehicle owners towards rent of the vehicle and the balance was retained. Revenue was of the view that the activity of the appellant falls within the definition of Tour Operator as per Section 65(115) of the Finance Act, 1994. Accordingly, SCNs were issued to the appellant proposing to demand Service. Tax on the amounts so collected by the appellant under the category of Tour Operator Service falling under Section 65(105)(n) ibid. After the due process of adjudication, Service Tax was ordered to be paid along with interest and penalties under various Sections of the Finance Act, 1994. Aggrieved by the impugned order, the present appeals have been filed.
2. With the above background, we heard Shri Jatin Mahajan, Advocate for the appellant as well as Shri Sanjay Jain,
3. The Ld. Advocate argued the case of the appellant and his arguments are summarized below:
(i) The appellant is a Department of the Govt. of Rajasthan. He denied that the appellant was acting as a Tour Operator
(ii) Prior to 1-10-2008, the activity relating to restricting the entry of tourists as well as vehicles in Ranthambore National Park was being done be by of Rajasthan Tourism Development Corporation on behalf of the Forest Department. W.e.f. 1-10-2008, the said work was being done by the Forest Department.
(iii) The Forest Department was performing the sovereign function of protecting and improving the environment and to safeguard the forests and wild life of the country as mandated under article 48A of the Constitution of India. The Wild Life (Protection) Act, 1972 provides for Notification and Management of National Parks for conservation of wild life. As per the provisions of the above Act, entry of persons into the National Park is restricted and the Forest Department was obligated to carry-out the same and for this purpose, the Govt of Rajasthan has issued notification and guidelines prescribing the fees to be charged for entry of tourists into the national park as sell as prescribing the total number of vehicles and types of vehicles allowed for entry into the national par.
P a g e | 12 ST/11413/2016, ST/11955/2018 & ST/12032/2019-DB
(iv) The above facts clearly demonstrated that the appellant department was performing its sovereign function in restricting the entry of tourists and vehicles in Ranthambore.
(v) Out of the amounts recovered from the tourists towards the vehicles made available to the tourists, the department has reimbursed the entire cent to the vehicle owners and no amount as alleged is retained by them.
(vi) During the period when Rajasthan Tourist Development Corporation was issuing the permit and collecting the money towards entry fees as well as vehicles, the entire amount collected was deposited with the State Govt in appropriate head of account.
(vii) The appellant department was not engaged in the activity of organizing any tour and hence were not covered within the definition of Section 65(115) of the Act.
(vii) Lastly, he submitted that CBE & C has clarified that charges recovered by any sovereign/public authority for carrying out any statutory function will not be liable for Service Tax.
4. The Ld. DR justified the impugned order. He argued that State Forest Department had made arrangements for supply of vehicles to tourists for going around the National Park and has recovered amounts towards the same. He submitted that this activity is covered within the definition of Tour Operator and hence liable for payment of Service Tax.
5. Heard both sides and perused the record.
6. The facts of the case are that Rajasthan Department of ment of Forests were collecting certain amounts from the tourists and making available vehicles on rent for safari tour into the Ran the Ranthambore park.
7. The Revenue is of the view that the above activity is covered within the definition of Tour Operator as per Section 55 (115) of the Finance Act, 1994. For ready reference, the definition is copied below:
The definition of Tour Operator as is stood prier to 16-5-2000, as per section 65(115) of the Act was as under "Tour Operator means any person engaged in the business of planning, scheduling, organizing or arranging four (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of trans port, and includes any person engaged in the business of operating of operating tours in a tourist vehicle covered by a permit, granted under the Motor Vehicles Act, 1988 (55 of 1988) or the rules made thereunder, With effect from 16-5-2008, the Finance Act, 2008 has substituted the following definition for Tour Operator:
"Tour Operator" means any person engaged in the business of planning, scheduling, organising or arranging tours (which may include arrangements for accomodation, sightseeing or other similar services by any mode of transport, and includes any person engaged in the business of operation 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 or, the rules made thereunder.
P a g e | 13 ST/11413/2016, ST/11955/2018 & ST/12032/2019-DB Explanation.- For the purpose of this clause, the expression "tour" does not include a journey organized or arranged for use by an educational body than a commercial training or coaching centre, imparting skill or knowledge or lessons on any subject or field.
8. It is to be noted that the definition prior to 16-5-2000 as well as subsequent to that date is applicable to any person engaged in the business of planning, scheduling, organizing or arranging tours.
9. The main argument advanced by the appellant against such levy of sevice tax is that it is a department of the State Govt of Rajasthan and is not engaged in the business of operator tour. It has further been submitted that all activities carried-out by the department in the Ranthambore National Park is towards discharging the constitutional mandated under Act 48A which mandated that "the State shall endeavour to protect and improve the environment and to safeguard the forests and wild life of the country." It has further been argued that Wild Life (Protection) Act, 1972 and the rules made thereunder have been enacted to carry-out the above constitutional mandate and actions including restricting the entry of visitors as well as vehicles and movement of tourists in such vehicles is towards safeguarding the forests and wild life in the National Park.
10. We perused the relevant Act and rules and note that the above Act empowers the State Government, for notification of National Park as well as vehicles into the National Park. It is evident that the primary objective of such restriction is to protect wild life and tourism is permitted only to the extent circumscribed by the above objectives.
11. The CBEC has issued master Circular No. 90/7/2007-5.T., dated 23-8- 2007. One of the issues clarified is regarding whether the activities of sovereign/public authorities performed under the statute can be considered as provision of service, for purpose of levy of Service Tax in S. No 999.01, circular has clarified that any fee collected as the provisions of the relevant statute for performing mandatory and statutory functions under the provisions of any law are not to be treated as services provided for consideration.
12. In the present case, we note that the amount recovered from the tourists are credited to the account of the State Govt after reimbursing the vehicle owners towards the rent payable for such vehicles. The above activities of the appellant, are to be seen in the context of Wilde Life Protection Act as well as Rules. We of the view that Forest Department has the mandatory duty to protect environment and to safeguard forests and wild life. Amounts recovered by them towards issue of entry permits as well as vehicles which have also been credited to the State Treasury are to be considered in the nature of fee or amount collected as per the provisions of relevant statute for performance of statutory functions. This cannot be considered as consideration for purposes of organizing tour.
13. In view of above discussions the Department is not justified in demanding Service Tax on the amounts collected by the appellant. The impugned order is set aside and appeals allowed.
4. From the above decision it can be seen that the activity which sought to be taxed by the revenue is absolutely identical in the above judgment as P a g e | 14 ST/11413/2016, ST/11955/2018 & ST/12032/2019-DB well as in the case in hand therefore the ratio of above judgment is directly applicable. Following the aforesaid decision, we are of the view that demand is not sustainable.
5. Accordingly the impugned orders are set aside and appeals are allowed.
(Order pronounced in the open court on 26.09.2024) (RAMESH NAIR) MEMBER ( JUDICIAL ) (C. L. MAHAR) MEMBER ( TECHNICAL ) Dharmi