No Reverse Charge Liability on Tour Operator When Taxi Operators Have Paid Service Tax: CESTAT [Read Order]
CESTAT held that tour operators are not liable to pay service tax under reverse charge when taxi operators have already paid the tax.
![No Reverse Charge Liability on Tour Operator When Taxi Operators Have Paid Service Tax: CESTAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/reverse-charge-liability-Service-Tax-CESTAT-taxscan.jpg "No Reverse Charge Liability on Tour Operator When Taxi Operators Have Paid Service Tax: CESTAT [Read Order]")
The New Delhi Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that a tour operator is not liable to pay service tax under the Reverse Charge Mechanism (RCM) when the taxi operators providing input services have already charged and paid service tax on their invoices. Incredible India Moments Pvt. Ltd., the appellant, is a registered tour...
The New Delhi Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that a tour operator is not liable to pay service tax under the Reverse Charge Mechanism (RCM) when the taxi operators providing input services have already charged and paid service tax on their invoices.
Incredible India Moments Pvt. Ltd., the appellant, is a registered tour operator offering customized inbound tourism services to foreign clients. As part of their service package, the appellant hired taxis from independent operators to facilitate local travel for tourists.
During an audit for the period April 2014 to June 2017, the department alleged that the appellant failed to pay service tax on these taxi services under RCM in terms of Notification No. 30/2012-ST dated 20.06.2012.
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A show cause notice was issued demanding Rs. 5,40,147 along with interest and penalties. The adjudicating authority confirmed the demand, and the Commissioner (Appeals), Jaipur, upheld the same. Aggrieved by this, the appellant approached the Tribunal.
Reverse Charge Mechanism under GST! Click here.
The appellant’s counsel argued that the taxi operators had already discharged the service tax on their end, and the appellant had availed CENVAT credit of the tax paid. Therefore, levying service tax again under RCM would amount to double taxation.
They also argued that both they and the taxi operators were engaged in the same line of business, travel and tourism, and the reverse charge provisions under Serial No. 7(a) of the said notification applied only where the service provider and recipient were not in the same line of business.
The two-member bench comprising Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) observed that the tribunal had already adjudicated the same issue in the appellant’s favor. The tribunal ruled that the services of taxi operators were input services for the appellant’s tour operations, and the invoices clearly showed that the taxi operators had paid service tax.
Reverse Charge Mechanism under GST! Click here.
Charging the appellant under RCM in such circumstances would result in impermissible double taxation. The Tribunal further held that the appellant and the service providers were in the same line of business, and so, the RCM provisions under Serial No. 7(a) of the notification were not applicable. The tribunal set aside the impugned order and allowed the appeal
To Read the full text of the Order CLICK HERE
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