Case Law Details
CESTAT, BANGALORE BENCH
Sharma Transports
Versus
Commissioner of Service Tax, Bangalore
Final Order No. 533 of 2012
Appeal No. ST/1007 of 2010
JULY 18, 2012
ORDER
M. Veeraiyan, Technical Member
This is an appeal against the order of the Commissioner of Service Tax, Bangalore No. 5/2010 (De novo) dated 12-2-2010.
2. Heard both sides.
3. The relevant facts in brief are as follows :
(a) The appellants are operating point-to-point buses for transport of passengers, providing buses on hire to companies and supplying buses for special trips.
(b) A letter dated 3-7-2002 was issued by the Superintendent of Service Tax requesting the assessee to obtain Service Tax registration and discharge the service tax for the period from 1-4-2000. The appellant filed Writ Petition No. 7414/2003 before the Hon’ble High Court of Karnataka and obtained interim order dated 13-6-2003 staying the operation of the letter dated 3-7-2002. Hon’ble High Court of Karnataka vide its order dated 22-9-2006 dismissed the above Writ Petition along with petitions by others.
(c) Consequently, a letter dated 10-10-2006 was issued to the assessee seeking records/documents which were submitted. Shri Suresh Kumar Sharma Proprietor of the firm appeared before the Central Excise authorities and given his statement on 9-4-2007.
(d) Based on the documents provided and the investigation conducted, a show-cause notice dated 20-9-2007 was issued to the assessee proposing demand of Rs. 4,93,41,151/- under the category of “Tour Operators Services” [Section 65(105)(n) of the Finance Act, 1994] for the period from 1-4-2000 to 31-3-2007 and also proposing demand of Rs. 5,49,059/- under the category of “Business Auxiliary Services” [Section 65(105)(zzzb) for the period from 2004-05 and proposing penalties under different sections.
(e) The appellant did not file reply and appear for the personal hearing on the ground that they have filed appeal before the Hon’ble Supreme Court against the judgment dated 22-9-2006 of the Hon’ble High Court. The Commissioner passed an ex parte order dated 20-11-2008.
(f) On appeal by the assessee, the Tribunal vide Final Order No. 1227/2009, dated 20-10-2009 remanded the case for fresh decision.
(g) The impugned order stands passed in pursuance of Tribunal’s remand order dated 20-10-2009 confirming demand of service tax of Rs. 4,98,90,210/- along with interest and imposing penalties under sections 76, 77 & 78.
4. The learned Consultant representing the appellant challenged the impugned order on various grounds.
(a) After narrating the activities of the appellants, he submits that they were merely running point-to-point bus service with vehicles owned by them and having contract carriage permits. Such activities could not be treated as that of a tourist operator as they did not arrange, schedule/organize/control the tours undertaken by the passengers and, therefore, they could not be treated as ‘tour operators’.
(b) Regarding vehicles given on hire charges to different companies, the permits for those vehicles were PSV permits which were in the name of the companies which have taken the vehicles on hire. They had no role whatsoever in the operation of vehicles at any point of time during the currency of the Agreement and the entire control was with the companies who have taken the vehicles on lease.
(c) The demand of Service Tax under the category of “Business Auxiliary Services” in respect of commission received by the appellant from other operators is not legal. The activities undertaken cannot be considered as falling under the category of “Business Auxiliary Services”. At the most, such collection by them in respect of bus ticket-booking activities may be covered under the category of “Travel Agent” which came into tax net only with effect from 10-9-2004 in terms of section 65(105)(zzzx).
(d) He further submits that Notification 20/2009-S.T., dated 7th July, 2009 was issued granting exemption to :
“The taxable service referred to in sub-clause (n) of clause (105) of Section 65 of the Finance Act, provided or to be provided to any person, by a tour operator having a contract carriage permit for inter-state or intra-state transportation of passengers, excluding tourism, conducted tourism charter or hire service, from whole of the service tax leviable thereon under section 65 of the said Finance Act.”
A corrigendum dated 31-8-2009 was issued to the above Notification for substituting the words “contract carriage or tourist vehicles with a permit” in the place of “contract carriage permit”.
The Notification No. 20/2009 was given retrospective effect from 1st day of April, 2000 by section 72 of the Finance Act, 2011.
In view of the above, the demand of service tax under the category of “Tour Operators Services” does’ not survive.
(e) In view of the absence of any stay by the Hon’ble High Court preventing issue of show-cause notice extended period of limitation could not be invoked and penalty could not be imposed.
(f) Further, the Central Government considering the genuineness of the claim by the transporters like the appellants chose to grant exemption retrospectively and, therefore, no penalty is warranted.
5.1 The learned Commissioner (AR) submits that the activities of the appellants relating to point-to-point transport of passengers and providing buses on lease/contract, are clearly covered under the category of ‘tourist operators services’. In this regard, he relies on the decision of the Tribunal vide Final Order Nos. 804 to 828/2011, dated 14-12-2001 in the case of Ideal Travels v. CCE[2012] 35 STT 7. However, he fairly submits that in view of the retrospective amendment to Notification No. 20/2009-S.T., dated 7-7-2009, the demand may not survive.
5.2 However, he submits that the collection of amounts by the appellants “in respect of bus tickets booking activities for other operators” is clearly towards services under the category of “Business Auxiliary Services” as they are in the nature of promoting the services of other operators. Further, the appellants have not revealed the fact of undertaking such activities. They have not taken the service tax registration and did not respond to the letter dated 3-7-2002 issued by the Superintendent of Service Tax and got the stay from the Hon’ble High Court. As they have not taken registration and filed service tax returns, and furnished the details only after the order dated 22-9-2006 passed by the Hon’ble High Court, there is a clear suppression of relevant facts during the material period and therefore, the demand for the period 2004-05 by show-cause notice dated 29-9-2007 invoking extended period of limitation is justified.
6.1 We have carefully considered the submissions from both sides and perused the records.
6.2 The appellants have claimed that they have operated the vehicles from point-to-point and that such activities cannot come under the category of tour and that, they cannot be considered as “Tour Operators”. This claim cannot be accepted in the light of the decision of the Tribunal vide Final Order Nos. 804 to 828/2011, dated 14-12-2001 in the case of Ideal Travels (supra). The relevant portion of the said order is reproduced below :
“9. We have given careful consideration to the submissions. After examining the definitions of “tour” and “tour operator” under Section 65 of the Finance Act, 1994, we note that the term “tour” always meant a journey from one place to another irrespective of the distance between such places and that “tour operator” always meant or included a person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988 or the rules made thereunder. The definition of “tour operator” was widened w.e.f. 10-9-2004 to mean 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 transportation. The meaning of tour operator was further expanded w.e.f. 16-5-2008 by including (in addition to tourist vehicle) 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. From these provisions, it would become abundantly clear that the activities of the assessees who are before us fell within the definition of “tour” and accordingly the assessees fell within the ambit of “tour operator” defined from time to time. Therefore, the arguments made on behalf of the assessees to the effect that they were only transporting passengers and not operating any “tour” are not acceptable. It is not in dispute that they were transporting passengers who were undertaking journey from one place to another irrespective of the distance between such places. In other words, the passengers were touring in the buses of the assessees. These buses were “tourist vehicles” within the meaning of this term defined under section 65 of the Finance Act, 1994 read with section 2(43) of the Motor Vehicles Act, 1988. Indisputably, the assessees were engaged in the business of operating “tours” in tourist vehicles covered by permits granted under the Motor Vehicles Act, 1988 or the rules made thereunder. As they were running the buses on predetermined routes in scheduled hours under such permits, they can be held to have undertaken the business of planning, scheduling, organizing or arranging tours. In other words, the assessees are squarely covered by the main part of the definition of “tour operator” under section 65(115) of the Finance Act, 1994 w.e.f. 10-9-2004. We note that the meaning of “tour operator” assigned by Parliament prior to 10-9-2004 continued on the statute took as it stood incorporated in the inclusive part of the definition of “tour operator” from 10-9-2004. The assessees who were engaged in the business of operating tours in tourist vehicles covered by permits granted under the Motor Vehicles Act, 1988 or the rules made thereunder were covered by this meaning of “tour operator” also. The findings recorded by the authorities below on the taxability of the assessees’ activities are well-founded. The assessees have no case on merits.”
6.3 The appellants have claimed that they have merely given on lease buses to the various companies and that they had no role in the actual plying of the vehicles by the said companies. Therefore, even if the plying of the said vehicles were treated as on tours, the lessee-companies only should be treated as the tour operators as the appellants had no control whatsoever on the operation of the said vehicles. It was further contended that the PSV permits were in the names of such lessee-companies. Alternatively, it was claimed that if the said activities are treated as providing ‘tourist operators services’ by the appellants, then also the appellants are eligible for the benefit of Notification No. 20/2009 which has been made retrospectively applicable with effect from 1-4-2000. Without going to the objection of the appellant regarding taxability of the said activities under ‘tour operators services’, we accept the alternative plea of the appellants that the appellants are eligible for the exemption under Notification No. 20/2009. Therefore demand of service tax on this activity is also liable to be set aside.
6.4 The appellants have undisputedly undertaken booking of tickets during the period 2004-05 for other service providers who are similarly placed as tour operators. They have received consideration from the said tour operators towards the services rendered. This is clearly towards “promotion or marketing of services provided by the client” which is included under the definition of “Business Auxiliary Services” in terms of section 65(105)(zzb).
6.5 According to the department, the appellants have not taken registration as service provider and have not furnished the details to the department and the fact of providing such services came to the knowledge on the basis of investigation undertaken by the department and therefore invocation of extended period of limitation is justified. However, the appellants are claiming that there were circumstances which do not qualify invocation of extended period and warrant imposition of penalty. These submissions have not been specifically considered in respect of demand relating to “Business Auxiliary Services”.
Therefore, we deem it appropriate to direct the Commissioner to reconsider these aspects.
7. In view of the above the appeal is disposed of as follows :
(a) We set aside the demand raised under “Tour Operators Services”.
(b) We sustain the demand raised under “Business Auxiliary Services” on merits.
(c) Since we are setting aside the demand under one of the two categories, we direct the original authority to reconsider the quantum of the demand of tax leviable under “Business Auxiliary Services” after taking into account the submissions on the issue of invoking extended period of limitation, and also consider whether any penalty is liable to be imposed and if so, at what extent. This exercise shall be undertaken after granting reasonable opportunity to the appellants.
