The Rajasthan High Court in Commissioner of Central Goods and Service Tax vs. Rajasthan Tourism Development Corporation Ltd. held that Facilitation Fee Charged by Rajasthan Tourism Development Corporation is subject to service tax within the normal period of limitation.
The assessee-respondent is a company under the State of Rajasthan whose main activity is to develop tourism and infrastructure activities in the State of Rajasthan. The company introduced railway transport by the name & style “Palace on Wheels” and “Royal Rajasthan on Wheels”, to promote the tourism in Rajasthan for people coming from abroad and outside State. They have entered into an agreement with various emporia/shops which come in the way of the journey on the said two trains, for stopping the trains before the said shops to facilitate the passengers to do shopping, etc. The respondent charged a facilitation fee for the said purpose.
The Revenue was of the opinion that the facilitation fee is in the nature of commission from various shops and Emporia for providing services of promoting or marketing or selling of goods provided or belonging to the Emporia/shops and was thus liable to Service Tax under the category of ‘Business Auxiliary Service’ in terms of clause 19(i) of Section 65 of Finance Act, 1994. A show cause notice was issued against the respondents, demanding service tax in respect of commission received by them within the period April 2005 to March 2010.
On appeal to the Tribunal, it observed that the activity undertaken by the respondent was held to be classifiable under ‘Business Auxiliary Service’ and was liable to Service tax. The Tribunal further held that the demand of service tax was sustained within the normal period of limitation and it set aside for the period beyond it.
The Bench comprising Justice Vijay Kumar Vyas & Justice K.S. Jhaveri confirmed the findings of the Tribunal and dismissed the appeal.