ORDER
M.V. Ravindran, Member (J)
1. This appeal is directed against the order in original dated 23-12-2005 that confirmed the demand of Rs. 70,61,632/- as service tax as tour operator services and Rs. 3,953/- as service tax on rent-a-cab operator service on the appellant, besides, a penalty of Rs. 70,65,585/- under Section 78 of the Finance Act, 1994 is imposed. Since the issue involved in this case is covered by the decision of this Tribunal we waive the requirement for pre-deposit of the amounts involved and take up the appeal itself for disposal.
2. Considered the submissions made by both sides and perused record. The issue involved in this case is regarding the demand of service tax on the appellant for plying bus between two points as tour operator. It is the contention of the appellant that their bus was carrying passengers/employees of the various factories at Subhanpura, Vadodara and they were not conducting any tour as envisaged under tour operator services. From the documents produced before us and before the lower authorities in respect of registration of the buses, we find that Regional Transport Officer has registered the buses of the appellant under Section 74 of the Motor Vehicle Act, 1988. This Section covers the registration of bus as contract carriage. If the appellant has to be charged service tax as tour operators then buses, which are plied by him should conform to the specification of a tourist vehicle as indicated in Section 2(43) read with Section 82 of Motor Vehicles Act, 1988. We find that in this case, it is not so. Further, on an identical issue, this Bench vide Order No. A/495/WZB/Ah’bad/07, dated 28-2-2007 [2007 (6) S.T.R. 430 (Tribunal)] has held as under:
5. We gave anxious hearing to both the sides and considered the submissions made at length by both sides. At the outset, it has to be decided whether the learned Commissioner (Appeals) was correct in coming to the conclusion that 4 vehicles which are in question are out of the ambit of ‘tourist vehicle’ or not. It can be seen that Section 2(43) of the Motor Vehicles Act, 1988 defines tourist vehicle as under:
(43) “tourist vehicle” means a contract carriage constructed or adapted and equipped and maintained in accordance with such specification as may be prescribed in this behalf.
It can be noticed on careful reading of the above reproduced section that a ‘tourist vehicle’ has to conform to the specifications given under Rule 128 of the Motor Vehicles Rules, 1988. The said Rule 128 of Central Motor Vehicle Rules specifies various special conditions as regards dimensions, structures, passengers entrance and exit, emergency doors, windows, driver entry and exit, etc. From the perusal of the said Rules, it is very clear that to get a vehicle registered as tourist vehicle the assessee has to first conform the vehicle to specifications given under Rule 128 of Central Motor Vehicle Rules, 1988.
6. It can be seen and noticed from the impugned order that the respondent had, in fact, produced certificate issued by Vehicle Registering authority i.e. State Transport Authority that 4 vehicles which are in question were covered under Section 2(7) of the Motor Vehicle Act as a contract carriage but they were not covered under Section 2(43) of the Motor Vehicle Act as tourist vehicle. On such evidence being produced before the Commissioner (Appeals), learned Commissioner (Appeals) has held that these 4 vehicles would fall out of ambit as a ‘Tourist Vehicle’ and granted relief to the respondents. We find that the Revenue has not produced any contrary evidence before us to indicate that the vehicles in question are not tourist vehicles.
7. Coming to the judgment cited by the learned SDR, we find that the Hon’ble High Court of Madras in the case of Secy. Federn. of Bus-Operators Asstt, of T.N. (supra) in para 14 has held as under:
We have, therefore, no hesitation first to hold that the first and foremost condition for a person to be held as “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.
Their Lordships have categorically held that first to hold for a person to be considered a tour operator, he must be operating a tourist vehicle in terms of Section 2(43) of the Motor Vehicle Act read with Rule 128 of Central Motor Vehicle Rules. The evidence produced before the lower authorities and before us indicate that the respondent is not operating ‘tourist vehicles’ as per Section 2(43) of Motor Vehicle Act, read with Rule 128 of Central Motor Vehicle Rules.
8. The judgment relied upon by the learned SDR in the case of Sri Pandyan Travels (supra) would in fact support the respondent’s case, as correctly contended by the learned Advocate. We may reproduce the observation of the High Court which is as under:
Inasmuch as the petitioner is a contract carriage operator and not a stage carriage operator, the observation of the Division Bench in respect of “spare buses of stage carriages” is hot applicable. It is also relevant to refer once again the observation in Para 41 “…. In fact, the most of the petitioners, who are having the contract carriage, are having the permits, under Section 88(9) of the Motor Vehicles Act read with Section 82, which are nothing but tourist “tourist permits” issued for the purpose of promoting the tourism and obviously issued to the tourist. Whereas contemplated under that section. Therefore, there will be no question of entertaining their objections and they will straightaway be covered under Section 65(52) of the Finance Act…
On the reading of the above reproduced portion of the judgment of the Hon’ble High Court it can be seen that the Hon’ble High Court came to the conclusion based on the fact that the petitioner therein were holding permits under Section 88(9) of the Motor Vehicle Act, read with Section 82. The provisions of Section 88(9) of the Motor Vehicle Act reads as under:
(9) Notwithstanding anything contained in Sub-section (1) but subject to any rules that may be made by the Central Government under Sub-section (14), any State Transport Authority may, for the purpose of promoting tourism, grant permits in respect of tourist vehicles valid for the whole of India, or in such contiguous States not being less than three in number including the State in which the permit is issued as may be specified in such permit in accordance with the choice indicated in the application and the provisions of Sections 73, 74, 80, 81, 82, 83, 84, 85, 86 of Sub-section (1) of Section 87 and Section 891 shall, as for as may be, apply in relation to such permits.”
A plain reading of the above Sub-section would indicate that tourist permit is granted to an operator if he has tourist vehicles. Hence the tourist vehicle has to be read in line with the Section 2(43) of Motor Vehicles Act and Rule 128 of Central Motor Vehicles Rules. We have already held that the respondent’s four vehicles did not answer to the description of ‘tourist vehicles.
9. The fact in the current case is that the 4 vehicles were never run as ‘tourist vehicles’, as envisaged under Section 2(43) of Motor Vehicles Act.
It can be seen from the above reproduced portion of the order that issue before us as regards the tour operator service is squarely covered in favour of the appellant. Hence that portion of the impugned order confirming service tax on the appellant as being a tour operator is liable to be set aside and we do so.
3. As regards the demand of service tax on the appellant as rent-a-cab operator, the learned Advocate submits that the appellant is not contesting the same. That portion of the order confirming the tax demand is upheld. Since almost entire service tax demand is set aside, we do not see any reason for imposition of any penalty on the appellant. The penalties imposed on appellants are unwarranted and are set aside.
4. The impugned order is set aside partly and the appeal is allowed as indicated above in the above paragraph.
(Dictated and pronounced in the open Court)