Case: SHAIL SHIKHAR ASSOCIATES VERSUS COMMISSIONER FO C.EX., MEERUT-I Citation: 20 !"! # S.T.R. $!! "T%i.-&e'.

# Iss(e: Whether the running of trolley between two fixed points amounts to tour operator services so as to levy Service Tax on the same?

)%ie* Fa+ts: The Appellants have leased a ropeway installed by Municipal Board, Mussorie at Mall oad, Mussorie and are engaged in operating it to entertain tourists by carrying tourists from Mall oad to !un "ill and bac# to Mall oad . A*te% a,en-,ent o* Se+tion ./" /# o* Finan+e A+t, 00$ to in+'(-e an1 ,eans o* t%ans2o%t in t3e -e*inition *o% to(% o2e%ato%, the Superintendent of $entral %xcise, &ehradun as#ed them to -e2osit se%4i+e ta5 on t3e +3a%6es +o''e+te- 71 t3e, *%o, t3e to(%ists and they paid such tax (n-e% 2%otest for the period 'ct( )**+ to September )**,( -ater they claimed refund of the said tax paid because they were of the view that t3e1 8i'' not 7e +o4e%e- 71 t3e -e*inition o* to(%( The Assistant Co,,issione% %e9e+te- t3e %e*(n-( Aggrieved by the order the Appellants filed an appeal with $ommissioner .Appeals/ who re0ected their appeal( Aggrieved by the order of the $ommissioner .Appeals/ this appeal is filed before the Tribunal(

A22e''ant Contention: 1irst it is necessary to record the relevant entries in 1inance Act 233+( Sub4 sections .2*,/.n/, .225/, .22+/ and .22,/ of Section 6, of 1inance Act( 233+ are as under7 (105)(n) "taxable service" means any service provided to any person by a tour operator in relation to tour; "tour" means a journey from one place to another irrespective of the distance between such places; "tourist vehicle" has the meaning assigned to it in clause ( !) of "ection # of the $otor %ehicles &ct' 1()) (5( of 1())); 8tour operator8 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 9ehicles Act, 23:: or the rules made there under( The argument on behalf of the Appellants is that t3e1 a%e not 2'annin6, s+3e-('in6, o%6ani:in6 o% a%%an6in6 to(%s. They are only operating a rope4 way ta#en on lease by them from the Municipality( They contest that s(+3 o2e%ato%s 8i'' not 7e +o4e%e- 71 -e*inition at ;Se+tion< ./" /#. They rely on the decisions of the Tribunal in Usha Brew Ltd. v. CCE - 2006 (4) S.T.R. (Tri.-!el.). They also submit that ropeways is an item covered by entry 25 of -ist422 of Seventh Schedule of the $onstitution of ;ndia and only the States can pass any law dealing with the sub0ect( They submit that the State is already charging ente%tain,ent ta5 on this activity( They also point out that no Show $ause <otice has been issued for appropriating the tax paid by them under protest( So they should be granted the %e*(n- +'ai,e- by them(

They further submit that they have stopped paying service tax from Sep( )**,4 and no demands have been issued for the subse=uent period( So also service tax is not being collected from other operators of ropeways at "aridwar in the State of >(?(

Res2on-ent Contention: The ;d( S& on the other hand submitted that the decision in the case of >sha Brew -td( was with reference to the definition prevailing prior to 2*434 )**+( 1urther the issue dealt with in the said decision was about the road 0ourney from one %o2e8a1 7oa%-in6 2oint to 7oa%-in6 2oint to t3e 7oa%-in6 2oint o* anot3e% %o2e8a1. The Tribunal held that if there is a tour, it is between "aridwar to the temples at the other end of the ropeways and not the transit between the boarding points of the two ropeways( The ;d( S& further argues that as the operator of the ropeways the Appellants are planning scheduling, organi@ing and arranging tours( "e also submits that the fact that the State !overnment is levying entertainment tax for the services provided cannot be reason to hold that service tax is not leviable on the service provided to the tourists( "e did not give any explanation why there is no demand for the period after Sep( )**,(

Reasonin6 o* =(-6,ent: We have considered arguments on both sides( We agree with the ar4 gument of the ;d( S& that the decision in Usha Bre"# Ltd. was not with reference to the legal position as applicable to this case and not on the activity impugned in this case( We are also not in agreement with the argument of the Appellant with reference to %ntry No. ! in List-II o* t3e S+3e-('e to t3e Constit(tion o* In-ia. This entry implies only that the control supervision, licensing etc( of rope4 ways will be with the State !overnments( The powers of the State to levy taxes are specified at Ent%ies $/ to .! o* t3e sai- 'ist ( <one of these items list taxes on ropeways, though taxes on entertainment is listed at S( <o( 6) of the list( So also 8taxes on goods and passengers carried by road or on inland waterways8 is specified at S( <o ,6 of the list( Still there is service tax on services of 8goods transport agencies8 and the validity of such levy has been upheld by $ourts( So the main contention to be examined is 83et3e% t3e a22e''ant is a to(% o2e%ato% ( That is to say whether the activity of the Appellant is covered by the definition under sub4section .22,/ of Section 6, whether the Appellant is doing any of the activities of planning, scheduling, organising or arranging tours( ;t is to be noted that the later part of the definition includes 8any person engaged in the business of operating tours in a tourist vehicle8( Thus the words 8organising8 and 8arranging8 is used to cover the activity of 8operation8 also 1urther the entries at .SectionsA 6,.2*,/.n/ and 6,.22,/ use the word 8operator8( So there cannot be any doubt that operation of tour by itself will be covered by the definitions, even without planning, scheduling etc( We have also examined the +ontention t3at t3e %o2e8a1s 7e'on6 to t3e M(ni+i2a'it1 an- it is 9(st ta>en on 'ease. When ropeways are on lease to the Appellant, the Appellants are in possession of the ropeway( 1or deciding ta5 'ia7i'it1, t3e tit'e to t3e 2%o2e%t1 is not %e'e4ant. ;t would have been relevant if the contract with the Municipality was for operation and maintenance and the Mu4 nicipality itself was issuing tic#ets and handling the tourists( ;n that situation also the issue can be as to who is rendering the service of tour operator and not the matter as to whether there is a tour( <ow the issue is what is the effect of the department not iss(in6 noti+e *o% *ina'i:ation o* ta5 2ai(n-e% 2%otest( When the assessee as#s for refund of the tax paid under protest and an order

re0ecting such refund is passed following due procedure, that itself is finali@ation of the protest made and there is no need for a separate S$< and 'rder in this regard( <ow the only issue that remains is whether, the issue that the department has not issued demands for the subse=uent period and to other operators is relevant for deciding the case at hand( ;n the first place these submissions of the Appellant are not verified submissions( Secondly in this proceeding we are only deciding the legality and propriety of the impugned order and for the issue to be decided these facts are not relevant( ;n view of our findings above, we re0ect the Appeal( .?ronounced in open $ourt on 4444/ SdB4 .Mathew Cohn/ Member .Technical/ .?er 7 Archana Wadhwa, Member Mi( 4 After going through the order proposed by my learned brother, ; proceed to record a separate order as ; do not find myself in agreement with the findings arrived at by learned Member .Technical/( As detailed facts along with the issue involved already stands enumerated in the order proposed by my learned brother, the same are not being repeated to avoid redundancy( The short issue involved in the present appeal is( as to whether the running of trolley between two fixed points amounts to tour operator services so as to levy Service Tax on the same( The appellants have reiterated the same grounds which were placed before the $ommissioner .Appeals/ and stand tabulated by him( 1or better appreciation, the same are reproduced below 74 8)( The Ad0udicating Authority has emphasi@ed on the phrase 8by any mode of Transport8( espectfully, the appellant would li#e to place that if the basic ingredient is missing i(e( planning, scheduling, organi@ing or arranging tours and only the phrase 8by any mode of transport8 is consid4 ered, in such a circumstance, activities of $ycle ic#shawBAuto ic#shawB-ift operators etc( would also become eligible to service tax in this category of service which is not the intention of legislature( Therefore, in absence of the basic ingredients of planning, scheduling, organi@ing or arranging tours, the activities cannot be held to be liable to service tax(

The appellant had operated a rope way which is a machine in itself, wherein ;ron ope is connected with ?illars at two ends and trolley operates upwards and downwards with the aid of power( That the said machine by no stretch of imagination be considered as a mode of transport( That for a specific mode of transport, at least registration with transport Authority is must, which is not at all applicable in case of a ropeway and as such the main ingredient of levy of Service Tax i(e(, mode of transport is absent( 1urther it well settled that transport can be conducted with the aid of movable mode of transport( That so far as ropeway is concerned, the same is an immovable asset and as such cannot be covered in the category of mode of transport( 1urther there is no carriage and no ferry of passengers as the trolley starts from Mall oad and ends at Mall oad itself with the same people( That it is purely means of entertainment of tourist to have thrill of travelling in air over a deep valley and en0oy the scenic beauty of the surroundings from the

height( Thus it is only a means of entertainment and not only any #ind of means of transport( 1urther the !ovt(, of >ttara#hand had charged %ntertainment tax on charges collected from customers towards such entertainment(8 Admittedly trolley operates between two points at mall and uphill point, with the aid of power and iron rope connected with pillars at two ends( The various definitions already stand reproduced in the order of my learned brother( The tour operators re=uire planning, scheduling, organiting or arrang ing tours by any mode of transport( As such, two criteria are re=uired to be spedfied for holding a person as a tour operator( 1irst that the said tour operator should be engaged in planning, scheduling, organising or arranging tours and such tours have be by any mode of transport( The movement of the trolley be4 tween the two fixed ends, where no planning, scheduling, organising or arranging tours is re=uired inasmuch as anybody present at site can get into the trolley ride to the other end of the top hill and can come bac# not by a specific run of the trolley but can spend any number of hours on the other end and come bac# by any run of the trolley bac# to the same spot from where they started( Admittedly, there is no planning, no scheduling, no organising or no arrangement for a specific tours when the trolley operates upward and downwards and anybody is free to get into the trolley and spend whatever time they li#e at the other end and come bac# to the same point from where they boarded the trolley( The second =uestion re=uired to be addressed is whether trolley can be considered as a mode of transport( <o doubt meaning of transport is movement from one place to another( But applying the above definition for a simpl icitor movement of trolley with the aid of power from one fixed point to another fixed point cannot be held to be a mode of transport( The appellants have rightly contended that in that case, any activity of any type of movement would amount to tour operator services( ;t is well settled that the entries have to be understood and interpreted in the manner in which legislature intended it to be and in the manner in which they are understood in the common parlance( Movement of trolley between two fixed points can never be held to be understood by a common person as a tour( ;t is also seen that such 0oy rides are never pre4organised or pre4scheduled and any person ma#es up his mind to ta#e such a ride, on the spur of a moment( As such, ; am of the view that both the above ingredients are missing in the said activity so as to bring it under the definition of tour operators(

At this stage, ; may draw support from the Trib>@44 ialDs decision in the case of >sha Breco -td( v( $$%, Meerut4A E)**6 .+/ S(T( ( :: .1ri(4&el(/E( ;n that case, ropeway 0ourney was being operated to visit the temples of Maa Mansa &evi and Maa $handi &evi located on the hills around "aridwar( The dispute in that case was the road 0ourney being provided by maxicabs between two boarding points for the ropeway( The Tribunal in para 5 observed that 4 8;t is not in dispute that the ropeway rides attract no service tax(8 Though the above observa 4 tion made by the Tribunal can be said to be a obiter inasmuch as the dispute before the "orthle Bench was not as regards the ropeway ride( "owever, the above observation reflects upon one fact that the evenue never raised demands on the ropeway rides( "owever, we find that in para F of the same 0udgment, it was observed as under 74 8F( The levy for service tax is on service provided Din relation to tourD( Therefore, the =uestion to be as#ed is which is the tour in =uestion( >ndisputedly, the pilgrimDs progress is from "aridwar to the temples in =uestion( Therefore, if there is a tour, it is the pilgrimage to the two temples( There cannot be a tour between two boarding points of a transport hub( The transit is merely incidental to the tour( The absurdity of the contrary view is clear upon applying it to everyday transit lin#s between road and rail stations, domestic and international terminals of an airport etc( We do not see the statutory definition of DtourD conferring an entirely artificial meaning on the commonly understood word, tourD(

The words Dirrespective of distanceD in the definition of tour only means there could be no argument that tour should be to a distant place( ;f distance is ta#en as a criterion, an intractable situation would arise, with by each person contending as to what should be the minimum distance( The law see#s only to remove such ambiguity( ;t does not give such an artificial meaning to the word DtourD as to ma#e any movement in a tourist bus a tour( To attract the levy, there must be a tour( ;n the present case, there is no doubt that there was a tour and that tour is the visit to the temples in =uestion( That is performed by not a tourist vehicle but in a ropeway !ondola( The appellant is right in its contention that the road lin# between the two boarding points is only an incidental lin# and cannot displace the pilgrimage as the tour( ))( ;t stands observed in said paragraph that the expression Dirrespective of the distanceD appearing in the definition of tour stands utilised for the purpose of clarifying that distance even short, would not be criteria for being included in the tour operator services( "owever, the Tribunal observed that such an expression cannot be given an artificial meaning so as to ma#e any movement from one place to another as covered under the said expression( Service Tax is on the services provided in relation to tour( Tour has specific connotation and the movement of the trolley from one fixed point to another fixed point and on continuous running position cannot be held to be a tour even from a common manDs point of view( The same is more in the nature of part of entertainment industry and fun industry( %ven in the case of >sha !reco -td( referred supra, the pilgrimage performed by a ropeway gondola was not the sub0ect matter of disputed issue of leviability of Service Tax and it was only the distance covered by the vehicle betweeu two boarding points on which the demand was raised by the evenue( ;n view of the above, ; hold that the appellants activities do not fall under the category of tour operator services so as to levy the Service Tax( SdB4 Archana Wadhwa Member .Cudicial/

&IFFERENCE OF O?INION Whether the activity of the appellant is to be held as covered by the definition of tour operator as appearing in the definition contained in Section 6,.22,/ of the 1inance Act, 233+ as held by learned Member .Technical/ or the same has to be held as falling outside the purview of the said definition as held by Member .Cudicial/? Whether the appeal is re=uired to be re0ected as held by learned Member .Technical/ or is re=uired to be allowed as held by Member .Cudicial/ ?8 The egistry is directed to place the matter before the "onible ?resident for referring the matter to the Third Member for deciding the difference( .?ronounced in the open $ourt )*454)*2)/ SS- @"Mat3e8 =o3n# "A%+3ana Aa-38a# @-

Me,7e% "Te+3ni+a'# Me,7e% "=(-i+ia'# E?er 7 &(<( ?anda, Member .M( 4 While answering the reference, 0udgment of "onDble "igh $ourt of littara#hand in the case of $$%, Meerut42 v( MBs( >sita Breco -td(, reported in )*254T2'-4)*4"$4 >G"A<&4ST on the sub0ect has come and that is in favour of the assessee( The appellant when made refund claim of s( ),F,,*)6B4 contending that service tax was not payable for the operation of ropeway not being a tour operator, such claim was re0ected by evenue holding that appellant was a 8tour operator8 within the meaning of Section 6,.22,/ of 1inance Act, 233+ .heremafter referred to as 8the Act8/ and liable to service tax under Section 6,.2*,/ of the said Act( Such decision of Ad0udicating Authority was upheld by the learned $ommissioner .Appeals/( Being aggrieved by such act of the authorities below, when appellant came before Tribunal, difference of opinion arose between the members to decide as to whether the appellant was a 8tour operator8 and provided taxable service under Section 6,.2*,/.n/ of the Act read with Section 6,.22,/ thereof( While learned Technical Member was of the opinion that ropeway belonging to Municipality ta#en on lease by the appellant to operate the same was a tour operator and liable to service tax, reverse was the view of learned Cudicial Member holding that running of ropeway between two fixed points by the appellant does not amount to 8tour operator service( ;n view of the difference above, following =uestion arose for opinion reference 74 82( Whether the activity of the appellant is to be held as covered by the definition of tour operator as appearing in the definition contained in Section 6,.22,/ of the 1inance Act, 233+ as held by learned Member .Technical/ or the same has to be held as falling outside the purview of the said definition as held by Member .Cudicial/? )( Whether the appeal is re=uired to be re0ected as held by learned Member .Technical/ or is re=uired to be allowed as held by Member 'udicial/?8 "eard evenue and also considered written submissions of the appellant as per re=uest made by application dated )24224)*2)( evenue supports the ad0udication and first appellate order(

The essential fact of the case is that the appellant was a licensee of <agar ?ali#a ?arisad, Masoori to operate ropeway for a period of , years from 24+4)**) to 52454)**, against public tender issued and licence deed executed on )F4+4)***( <agar ?ali#a ?arisad as licensor and owner of ropeway had allowed the appellant as a license to run the same under certain restrictive covenants in terms of $lauses F, :, 3, 2* and 22 of the licence deed( ;n terms of $lause F there was restriction of number of passengers to be allowed to travel in each cabin while $lause : restricted the fees chargeable from each passenger( $lause 3 obliged the licencee to insure the ropeway and $lause 2* re=uired passengers to be insured by the appellant licensee( $lause 22 re=uired meeting the claim of in0ury of passenger by the licensee( With the aforesaid modality of licence deed, the appellant was allowed to operate the ropeway of <agar ?ali#a and such factual aspect called for testing by the evenue Authorities with the provision of law under which the appellant was brought to tax( Section 6,.2*,/.n/ of the Act has taxing entry and meaning of the term 8Tour 'perator8 is given by Section 6,.22,/ of the Act( &efinition of Tour 'perator8 under Section 6,.22,/ states that any person engaged in the business, planning, scheduling, organi@ing or arranging tours by any mode of transport shall be 8Tour 'perator8( ;n terms of such definition to call a person as 8Tour 'perator8 he should be either planner of tour or organi@er

or arranger thereof( So also, scheduling tour brings the service provider to the category of tour operator( Meaning of the term 8tour8 is given by Section 6,.225/ of the Act( 8Tour8 means 0ourney from one place to another irrespective of distance from such place( According to the deed of licence the appellant was to transport the tourists who choose to use the ropeway for their 0ourney and come on their own volition without any planning, scheduling, organi@ing or arranging tour by the appellant licensee( 'nce tourists are not governed by any planning, scheduling, organising or arranging for their 0ourney and not dependent on the licensee appellant for such planning, scheduling, organi@ing or arranging for their tours but only avails the facility of ropeway provided by appellant licensee during wor#ing hours from 6 A(M( to 22 ?(M( on payment of fees prescribed by $lause : of licence deed, they were not beneficiary of any planning, scheduling or arranging of tours since tour to be taxable has to follow its preceding activities enumerated by Sect4ion 6,.22,/ of the Act( A++o%-in6'1, t3e a22e''ant 3a- not a+te- as Bto(% o2e%ato%B 8it3in t3e ,eanin6 o* Se+tion ./" /# o* t3e A+t *o% 83i+3 t3e ta5in6 %ntry 6,.2*,/.n/ thereof is not attracted( $onse=uently, there shall not be liability to tax following the ratio laid down by Montle "igh $ourt of >ttara#hand in the case of $$%, Meerut42 v( Ws( >sha Breco -td( 4 )*254T;'-4)*4"$4>G"A<D&4ST( ;n view of the above, =uestion <o( ; in difference of opinion is an swered negatively stating that the appellant was not a 8tour operator8 within the meaning of Section 6,.22,/ of the 1inance Act, 233+( 1or the negative answer to =uestion <o( 2, appeal is to be allowed and =uestion <o( ) is answered accordingly( egistry is directed to place the matter before appropriate Bench for ma0ority order( .?ronounced in the open $ourt on 22424)*25/ Sd B4 &(<(?anda Member .Cudicial/

FINAL OR&ER 5)( ;n view of the ma0ority order, the impugned orders are set aside and appeal allowed with conse=uential relief to the appellant( SdB Sd B4 .Mathew Cohn/ .Archana Wadhwa/ Member .Technical/ Member .Cudicial/

&e+ision: The appeal is allowed Co,,ent: The essence of this case is that appellant has not tour operator 8it3in t3e ,eanin6 o* Se+tion ./" /# o* t3e A+t *o% 83i+3 t3e ta5in6 %ntry 6,.2*,/.n/ thereof is not attracted behind

the reason is there in the absence of planning, scheduling, organi@ing or arranging tour by the appellant( "ence, taxability is not arise on appellant for service tax purpose(