THE MADHYA Pradesh High Court here today admitted a petition filed by a private education society of Balaghat district challenging constitutional validity of section 65 of Finance Act 1994 imposing service tax on the buses operated by schools treating them like tour operators.
The Balaghat Education Society said the buses run by it are used for carrying students to the school from their respective residences and vice versa.
A division bench comprising Chief Justice A K Patnaik and Justice Ajit Singh served notices on the Union government and others after admitting the Society’s petition.
The Society said it had received a letter from the Customs & Excise Department saying the bus services provided by it to the students come within purview of the tour operator, so it had to pay the taxes.
The Society claimed that the state government is empowered to impose tax on tour operators and not the Union government as per the provisions of Constitution of India. Therefore, to tax the passengers traveling in buses is an issue that comes within the purview of the state government.