Custom, Excise & Service Tax Tribunal
M/S. Sandis International Tours And ... vs Commissioner Of Central Excise, Pune ... on 9 December, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. ST/198/2009 (Arising out of Order-in-Appeal No. PIII/VM/88/09 dt. 13.07.2009 passed by the Commissioner (Appeals) Central Excise, Pune-III ) For approval and signature: Honble Shri Ramsh Nair, Member (Judicial) Honble Shri C.J. Mathew, 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 : No
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?
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M/s. Sandis International Tours and Travels
:
Appellant
VS
Commissioner of Central Excise, Pune -III
:
Respondent
Appearance
Shri Sagar A. Kulkarni, Advocate for Appellant
Shri V.K. Kaushik, Asstt. Commr. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri C.J. Mathew, Member (Technical)
Date of hearing : 09/12/2015
Date of pronouncement:06/04/2016
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Order-in-Appeal No. PIII/VM/88/09 dated 13/07.2009 passed by Commissioner (Appeals) Central Excise, Pune-III whereby Ld. Commissioner (Appeals) upholding the Order-in-Original No. STC/PIII/13/ADC/2008 dt. 14.11.2008, rejected the appeal filed by the appellant.
2. The fact of the case is that the appellants are engaged in providing service falling under the category of Tour Operator and Business Auxiliary Services and were holders of Service Tax Registration ECC No.1071121646. During the survey conducted by the department, it was observed that the appellant was neither paying service tax nor filing any return during the period April 2000 to September 2003. On further inquiry it was revealed that the appellant had not only provided services under Tour Operator but were also engaged in receiving income on account of Hotel Booking, which was covered under the category of Business Auxiliary Service. On which the appellant neither obtained registration nor paid service tax nor filed any return under the category of Business Auxiliary Service. Show cause notice was issued demanding the service tax under Section 73(1) and also proposing the imposition of penalty and interest under Sections 75, 76, 77 & 78 of the Finance Act, 1994. The adjudicating authority confirmed the proposal made in the show cause notice. Aggrieved by the Order-in-Original the appellant filed appeal before Commissioner (Appeals) who maintained the said Oder-in-Original and the appeal filed by the appellant was rejected. The Ld. Commissioner (Appeals) in the impugned order upheld the demand on the ground that the appellant were engaged in operating three buses between Pune and Sahar Air Port and back, in three schedules on a daily basis and the Buses in which they carried passenger have been granted necessary permit under a contract carriage by the RTO, Pune. He contended that as per the definition of Tour Operator provided under Section 65(115) of the Finance Act, 1994 the bus services provided by the appellant is covered under the definition of Tour Operator and, therefore, the appellant was liable to pay the service tax . The Ld. Commissioner heavily relied upon the judgment of the Honble Madras High Court in the case of Sri Pandyan Travels Vs. Commissioner of C. Ex. Chennai-II 2006 (3) S.T.R. (151) (Mad.). Aggrieved by the impugned order, the appellant filed this appeal before us.
3. Shri Sagar Kulkarni, the Ld. Counsel appearing for the appellant submits that their buses were plying from Pune to Sahar International Airport and Santacruze Domestic Airport, Mumbai on scheduled basis. The permit of the buses are of contract carriage. They are operating the bus service as a stage carriage. Therefore, the service does not fall under the category of Tour Operator. He submits that this Tribunal has passed various decisions on the identical issue wherein this Tribunal has conclusively and consistently held that even though the permit is of a contract carriage but the buses should conform the standards and specifications as prescribed under Rule 128 of Central Motor Vehicle Rules, 1989. Whereas there is no finding on this aspect, therefore both the lower authorities have wrongly held that the service of the appellant is covered under Tour Operator service. In this regard he placed reliance on the following decisions:
(i) Jai Somnath Transport & Another Vs. Commissioner of Service Tax Mumbai-II 2015-TIOL-2445-CESTAT-MUM
(ii) Commissioner of Service Tax, Ahmedabad Vs. Patel Tours & Travels 2010 (20) S.T.R. 698 (Tri.-Ahmd.)
(iii) Maharashtra State Road Transport Corpn. Ltd. Vs. C.C.E., Nashik 2014 (36) S.\T.R. 161 (Tri.-Mumbai) The Ld. Commissioner heavily relied upon the judgment of Honble High Court of Madras in the case of Sri Pandyan Travels Vs. Commissioner of C. Ex. Chennai-II 2006 (3) S.T.R.151 (Mad.). In this regard, he submits that though the Honble High Court has decided that even the contract carriage vehicle is also covered under the definition of Tour Operator but at the same time it was made clear that the tourist vehicle must be within the meaning of Section 2(43) of Motor Vehicles Act, 1988, which says that any such vehicle which answers the description of tourist vehicle under Rule 128 and which would run under contract would become a tourist vehicle. In the present case, the specifications of buses do not conform to the specification provided under Rule 128 of the Central Motor Vehicles Rules, 1989. Therefore, the judgment in the case of Sri Pandyan Travels (supra) is not applicable in the present case. He further submits that the appellant categorically made submission before both the lower authorities that the appellant did not carry any tour during the financial year 2000-01 and 2001-02. During which no service tax liability arise and therefore the tax liability if any arise, shall confine to the period 2002-03 and 2003-04 which comes to Rs.1,12,046/-. However, the Ld. Commissioner (Appeals) did not even whisper anything on this factual aspect.
4. Shri V.K. Kaushik, Ld. Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that the buses used of the appellant are having contract carriage permits. As per the definition of Tour Operator prevailing at the relevant time falls under the category of vehicle under contract carriage permit fall under the tourist vehicle, accordingly bus operation under contract carriage permit is a Tour Operator. The appellant is legally required to discharge the service tax as a Tour Operator.
5. We have carefully considered the submissions made by both the sides. As per the various decisions, on the identical issue this Tribunal and Honble High Courts have given various judgments wherein conclusively one important principle was emerged to decide whether a service is a tour operator service or otherwise, that is if the permit of the vehicle is contract carriage permit issued under Section 2(43) of Motor Vehicle Act, 1988 and as per the said Section the specification of the vehicles must be in terms of Rule 128 of Central Motor Vehicle Rules 1989. In this regard the relevant operative portion of the various judgments are reproduced below:
(i) In the case of Jai Somnath Transport and Anothers(supra) are held that:
4.5 Ld AR interpreted the judgement in Secy. Federn. Of Bus-Operators Assn. of T.N. to mean that all contract carriages will be covered under the definition of tourist vehicles. This is clearly a fallacious reading of the judgement. We see on reading the whole judgement that the underlying view being expressed throughout is that for a vehicle to be called a Tourist Vehicle, it should be a Contract carriage constructed or adapted and equipped in accordance with the such specifications prescribed under Rule 128 of the Motor Vehicle Rules. It was held that However, it must be remembered that in the present case, we are not concerned with the two kind of permits. The question posed before us is whether a vehicle covered under Section 72(2)(xvii) of the Motor Vehicles Act can be viewed as a tourist vehicle. The question is not as to whether a permit under Section 88(8) would ipso facto become a permit covering a contract carriage. It has to be borne in mind that a tourist vehicle as defined under Section 2(43) of the Motor Vehicles Act which definition has been picked up as it is by the Finance Act, means a contract carriage constructed or adapted and equipped or maintained in accordance with such specifications as may be prescribed more particularly the specifications prescribed under Rule 128 of the Motor Vehicles Rules. Therefore, this ruling will not help the petitioners to suggest that a vehicle covered under Section 72(2)(xvii) merely for that reason or merely because it is having permit under Section 88(8) of the Motor Vehicles Act for its occasional use can never become a tourist vehicle. A plain reading of the provisions of the Motor Vehicles Act says that any such vehicle which answers the description of the tourist vehicle under Rule 128 and which would run under a contract would become a tourist vehicle and once it becomes a tourist vehicle so long as it is being used under any permit under the Motor Vehicles Act, by a person who is engaged in the business of operating the tours then, the requirement of the Finance Act would be complete. Therefore the contention of Ld AR is rejected.
4.6 Revenue has also tried to rely on the judgment in the case of Sri Pandyan Travels Vs. Commissioner of C.Ex. Chennai-II 2006 (3) STR 151 (Mad.) to their favour. However, on going through the said judgment we find that it only supports the views expressed in paras above. The judgment refers to the Secy. Federn. Of Bus Operators Association of T.N.(supra) as follows:
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 views expressed above find confirmation from the fact that the definition of Tour Operator was changed with effect from 16-05-2008 to read 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, 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.
Thus the intention to include all contract carriages in the definition was given effect from this date only.
4.7 Revenue, it appears, is confusing the words Tourist permit and Tourist vehicle and reading the word permit to mean the same as Tourist permit. Here too the judgement in Secy. Federn. Of Bus Operators Association of T.N.(supra) clarifies the matter beyond doubt. It was held therein that 29. It, therefore, cannot be said that the permit contemplated under Section 65(52) of the Finance Act is a tourist permit alone contemplated under the Motor Vehicles Act or the rules framed thereunder. The argument is obviously based on the faulty logic that in Section 65(51) and (52) of the Finance Act the term tourist vehicle is used and the Motor Vehicles Act provides for the tourist permit under Section 88(9) read with Rules 82 to 85 or under 1993 Rules only for tourist vehicles and therefore, any tourist vehicle must have a tourist permit. The logic is obviously incorrect because even under the Motor Vehicles Act a tourist vehicle does not necessarily need a tourist permit. All that is contemplated under Section 2(43) of the Motor Vehicles Act while defining the tourist vehicle is that it should be a contract carriage and should have been constructed or adapted and equipped or maintained in accordance with the specifications prescribed. We have already pointed out that those specifications are provided in Rule 128 of the Motor Vehicles Rules in case of vehicles other than motor cabs. Therefore, even if the Motor Vehicles Act and the Rules framed thereunder contemplate the tourist permit, it is not necessary that every tourist vehicle must have a tourist permit. Again, it is to be seen that we would be bound by the language of Section 65(50) to (52) alone in interpreting those provisions. Merely because the Motor Vehicles Act provides for tourist permit, it would not mean that Section 65(52) of the Finance Act also contemplates only a tourist permit. We cannot do violence to the language of the provisions by holding that a tourist vehicle contemplated under the Finance Act must be a vehicle having only tourist permit.
(ii) In the case of Mharashtra State Road Transport Corpn. Ltd. (supra) are held that:
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 a 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 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 definitions, 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.
In view of the findings in the above judgments, it is clear that in order to classify the service under Tour Operator, tt is necessary that the vehicle should be tourist vehicle in terms of Section 2(43) of the Motor Vehicle Act, 1988 read with Rule 128 of the Central Motor Vehicles Rule 1989. From the orders of both the lower authority, it is observed that they have not verified and given any finding on this vital aspect, therefore the matter needs to be reconsidered by the appellate authority. On the issue of quantification of demand on the ground raised by the appellant that they have not provided the tour operator service during the period 2000-01 and 2001-02 and the tax liability if any arise, it must be limited for the period 2002-03 and 2003-04 which comes to Rs. 1,12,046/-. On this issue though the appellant have made a categorical submission and the same was recorded by the Ld. Commissioner in para 4 of the impugned order, but no finding was given, therefore this issue also needs reconsideration. As per our above discussions, the impugned order is set aside and the matter is remanded to the Commissioner (Appeals) for reconsideration of the entire matter taking into consideration our above observations. The appeal is allowed by way of remand in the above terms.
(Pronounced in court on 06/04/2016) (C.J. Mathew) Member (Technical) (Ramesh Nair) Member (Judicial) Sm 13 Appeal No. ST/198/2009