service tax on transport of people by road

routes, are required to pay service tax as they ply their buses having ‘contract

carriage permits’ and thus fall within the definition of tour operators. On the other

hand the State Undertakings run buses, which run on the same route carrying

passengers, are not subjected to service tax as these buses bear ‘stage carriage

permit’. In order to bring parity between the two, the services provided by the tour

operators undertaking point-to-point transportation of passengers in a vehicle

bearing contract carriage permit is being fully exempted from service tax, provided

such transportation is not in relation to tourism or conducted tours, or charter or

hire. (Notification No. 20/209-ST dated 07.07.09 refers).