The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in New Delhi has ruled in favour of Make My Trip (India) Private Limited, quashing substantial service tax demands and penalties imposed on the company.
The appeals contested the Order which confirmed demands against Make My Trip (formerly M/s. IBIBO Group Limited) for the period November 2013 to June 2017.
The Tribunal addressed multiple core issues, including whether Make My Trip was providing short-term accommodation services or tour operator services, the eligibility for abatement under notifications dated June 20, 2012, for tour operators and Applicability of Section 73A of the Finance Act, 1994, regarding amounts collected as service tax.
Get the Complete GST Case Digest of Supreme Court, Click here.
The Service Tax Tribunal also examined whether the Simultaneous invocation of Sections 73 and 73A of the Finance Act is valid and also vetted the tax liabilities concerning hotels with tariffs less than Rs. 1000 per day and those located in Jammu & Kashmir.The applicability of extended periods for the recovery of taxes.
The Tribunal reiterated its earlier findings in a similar case involving Make My Trip, establishing that the company acts as a facilitator for booking accommodations, not as a provider of short-term accommodation services. Make My Trip was deemed eligible for abatement as a tour operator.
The Tribunal held that Make My Trip collected amounts from customers representing service tax and subsequently paid these amounts to hotels. Therefore, Section 73A was not applicable.
Get the Complete GST Case Digest of Supreme Court, Click here.
The Tribunal found the invocation of the extended period of limitation for recovery of tax under Section 73(1) of the Finance Act to be unjustified.
The impugned order had already resulted in a significant reduction of the tax liability for Make My Trip, overturning the previous demands and penalties, with the total demand being Rs. 960.14 Crores, which was confirmed to the extent of Rs. 510.49 Cr and whereby a sum of Rs. 449.64 Cr was dropped from the total demand.
The Tribunal concluded that Make My Trip operates as a tour operator and facilitator rather than a provider of short-term accommodation services. Consequently, the substantial tax demands and penalties were set aside, and all three appeals (Service Tax Appeal Nos. 50081, 50082, and 50083 of 2022) were allowed, resulting in a major relief to Make My Trip.
Get the Complete GST Case Digest of Supreme Court, Click here.
Justice Dilip Gupta, President and Hemambika R Priya, Member (Technical) held that Make My Trip qualified as a tour operator and, therefore, on the service of booking of accommodation of service, Make My Trip was entitled for the benefit of abatement, citing the earlier decision.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
