Service Tax – Exemption for tour operator Service – Corrigendum to Notification after nearly two months.
Notification No. 20/2009-Service Tax, dated the 7 th July, 2009, exempts 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 intrastate transportation of passengers, excluding tourism, conducted tours, charter or hire service, from whole of the service tax leviable thereon under section 66 of the said Finance Act.
This notification was issued on 7 th July 2009. Now the Government has issued a corrigendum on 31st August stipulating that ‘contract carriage' to be replaced with “ contract carriage or tourist vehicles with a permit ”.
Now can the government amend a notification by a corrigendum fifty days after the original notification was issued?
But what is this all about? Let us look at some definitions:-
Definition of Tourist Vehicle as given at Sec 2(43) of MV Act, 1988
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.
"contract carriage" means a motor vehicle which carries a passenger or 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;
As per the definition above a tourist vehicle is a also a contract carriage, hence even without this amendment, perhaps the notification covers point to point transport of passenger even in a tourist vehicle.
The anomaly of not granting exemption to tourism section as discussed in our article - exemption to tour operators - Why is this special interest towards point-point bus operators? still continues, despite the amendment.