M/S L.N. Gupta Transport Co vs Commissioner Of Central Excise, Nagpur

IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. III

APPEAL NO. ST/303/10-Mum

(Arising out of Order-in-Appeal No. SR/91/NGP/2010 dated 15.03.2010 passed by the Commissioner of Central Excise & Customs (Appeals), Nagpur.)

For approval and signature: Honbl Shri P.S. Pruthi, Member (Technical) Honble Shri Ramesh Nair, Member (Judicial)

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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 : Yes 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? =====================================================

M/s L.N. Gupta Transport Co.

: Appellant Versus

Commissioner of Central Excise, Nagpur : Respondent

Appearance Shri Nilesh Sindhwani, C.A. : For Appellant Shri S.L. Karoliya, Asst. Commr. (A.R.) : For Respondent

CORAM: HONBLE SHRI P.S. PRUTHI, MEMBER (TECHNICAL) HONBLE SHRI RAMESH NAIR, MEMBER (JUDICIAL)

Date of Hearing : 06.10.2015 Date of Decision: .2015

ORDER NO.......................................................

Per: P.S. Pruthi:

The issue in this case is whether the activity of transportation services, that is carrying employees of companies from specific points to the factory/establishment and back can be categorized under Tour operator service as defined under Section 65(105)(n) read with Section 65(115) of the Finance Act. The period of dispute is October, 2002 to July, 2007.

2. The appellant are in possession of permits under Rule 72(1)(iv) of Motor Vehicles Rules for contract carriages. Before 10.09.2004 tour operator was defined under Section 65(115) to mean a person who is 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 there under. With effect from 10.09.2004 tour operator means any person engaged in 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 tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988 or the Rules made there under.

3. The main plea is that the appellant do not get covered under the term tourist vehicles because their vehicles do not meet the specifications laid down in Rule 128 of the Motor Vehicles Rules, 1989. The other contention is that Vehicles Registration Authority grants separate licence under Section 2(7) of the Motor Vehicles Act for contract carriages and under Section 2(43) read with Rule 128 for tourist vehicles. Lastly, the contention is that they would not be covered under Service Tax levy even after 10.09.2004 because they are not engaged in the business of planning, scheduling and organizing or arranging tours.

3. The learned A.R. reiterates the finding of the Commissioner (Appeals) in the impugned order.

4. We have carefully considered the facts and submissions made by both sides.

5. Firstly, we find that neither the adjudicating authority nor the Commissioner (Appeals) had brought out the clear distinction between the levy on tour operator service pre - 2004 and post - 2004. As regards the period pre  2004, the issue has been dealt with total in Tribunals Order in the case of M/s Jai Somnath Transportation and Others  A/3557-3565/15/STB dated 06.10.2015. In the said order reliance was placed on various judicial pronouncements including of the Hon'ble Madras High Court in the case of Secy. Federn. Of Bus-Operators Assn. of T.N. Vs. Union of India 2006 (2) S.T.R. 411 (Mad.) holding that the vehicles which are covered under the definition in Section 2(43) of Motor Vehicles Act read with Rule 128 of Central Motor Vehicles Rules alone would come within the definition of Tourist Vehicles in Section 65(115) and be covered under the Tour Operator service. The Honble High Court held:

20 If we turn to the definition of the contract carriage, which is defined in Section 2(7) of the Motor Vehicles Act, it becomes clear that there is identical language used therein (with emphasized words). Therefore, it cannot be said that the said vehicle which is covered under Section 72(2)(xvii) can never become a tourist vehicle. We hasten to add, however, that before any such vehicle is treated as a tourist vehicle, it will have to conform to the conditions laid down for the tourist vehicle in Rule 128 of the Motor Vehicles Rules. That would by far be the only condition..

36 At this stage, all the learned Counsels pointed out that the petitioners spare buses may not be the tourist vehicles within the meaning of Section 2(43) of the Motor Vehicles Act and, therefore, they are not liable. Indeed, if the vehicles owned by the petitioners are not the tourist vehicles within the meanings of Section 2(43) of the Motor Vehicles Act read with Rule 128 of the rules framed thereunder then, such petitioner would not be required to be registered under the Finance Act. The learned Senior Counsel for the Department very fairly accepted this position. However, he pointed out that it would be for the petitioners to raise their objections before the concerned authorities under the Finance Act and their objections would be decided upon. Therefore, the petitioners are permitted to raise the objections before the concerned authorities issuing the notices and the authorities will decide as to whether the petitioners vehicles are the tourist vehicles as contemplated under Section 2(43) of the Motor Vehicles Act, which is sine qua non for the application of the Finance Act. Needless to mention that if they are not the tourist vehicles, the provisions of the Finance Act would not apply and more particularly the provisions of Section 65(51) and the other allied sections like Section 66(3), etc.

It is clear that to be covered under the tour operator service the vehicle most be a tourist vehicle under Section 2(43) of the Motor Vehicles Act read with Rule 128 of the Motor Vehicles Rules, 1989. In the present case the vehicles are not tourist vehicles under Rule 128 ibid. Therefore the demand for the period pre - 2004 is not sustainable.

5. As regards the period post - 10.09.2004 we may examine whether the appellants are engaged in the business of planning, scheduling, organizing or arranging tours. We find that the appellants have only planned for providing vehicles of a specific capacity with a particular schedule. We also note that at the time of expansion of the definition of Tour Operator on 10/09/2004, CBEC Circular No. 80/10/2004-ST dated 17/09/2004 clarified that while the existing levy on tour operators engaged in operating tours in tourist vehicles remain as such, in case of a package tour (which are planned, scheduled, organized or arranged by tour operators), the scope of the levy is being extended by removing the limitations regarding transportation by tourist vehicle only which means it will include air-rail-cab travel also. From the above clarification, the intent of the legislature was to expand the levy of service tax for planning/scheduling/organizing/arranging the package tours for all modes of travel. It was not intended to expand the scope to cases such as the present one. In the present case, the appellants provide/supply the contract carriage business (not tourist vehicles) to their customers on their demand only. Therefore the activity of the appellant is not covered by the definition of Tour Operator for the period post 10-09-2004.

5.1 We find from the records that the lower authorities have given no reasoning to state that the activity of the appellants post 10.9.2004 gets covered under the first part of the definition of Tour Operator service. As already observed above, the appellant were providing vehicles/buses to their customers on agreed terms during the period specified for an agreed commercial consideration for transportation of the company/factory employees, at specified places through specified routes and timings. It is also not shown by Revenue that the appellant had authority to pick-up or drop the said persons at any place/route of their choice or they had flexibility to alter the route or timings according to their own choice or whims and fancies. Therefore the employees of only those companies/factories etc., who had entered into a contract had the authority to board the buses at pre-determined pick-up points at fixed timings agreed upon. No element of planning or scheduling is therefore shown to have been done by the appellant. They only act at the companys behest-II. Thus, we find from the above that appellant were not engaged in the business of planning, scheduling, organizing or arranging package tour of their own as provided under the new definition of tour operator service but were adhering to the conditions laid down with various customers. Therefore it can not be said that they were covered under the first part of the amended definition of tour operator. As already discussed, the vehicles are also not tourist vehicles so as to be covered under the second part of the definition.

6. In view of the above, impugned order is set aside and appeal is allowed.

(Pronounced in Court on ...............2015)

(Ramesh Nair) (P.S. Pruthi) Member (Judicial) Member (Technical)

Sp

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APPEAL NO. ST/303/10-Mum