Service Tax not Leviable on Tour Services for Hajj Pilgrimage in Saudi Arabia by Indian Pilgrims: CESTAT [Read Order]

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that service tax is not leviable on tour services for hajj pilgrimage in Saudi Arabia by Indian pilgrims. The period involved in all these appeals is with effect from 2011-12 to 2014-15. The appellants are engaged in providing the services of tour operators and air ticket agents. They were also providing packaged tour operator services by way of conducting packaged tours for Hajj/ Umrah pilgrims to Mecca-Madina at Saudi Arabia. Based on an intelligence, it was observed that the appellants have not obtained the service tax registrations and have failed to declare their taxable receipts to the service tax Department. The Counsel for the appellant submitted that place of provision for the service herein i.e. the tour for Hajj to Mecca is outside the taxable territory. As per the Rules of place of provision there arises no service tax liability. Ld. Counsel has impressed upon the exemption notification No. 25/2012 submitting that Entry 5 B of said Mega Notification exempts the services provided by a person by way of conduct of religious ceremony, the payment of service charges is also exempted for such services. The Counsel further argued that The Board Circular dated 30.10.2009 is also relied upon under which the service tax is not changeable on the services provided in respect of tour undertaken for the Hajj Pilgrims. With respect to the period post negative list the amendments in the rules of place of provision of service in the year 2012 have been impressed upon, submitting that the services were still not made taxable. The demand is alleged to have wrongly been confirmed. The Departmental Representative argued that the service has to be considered as taxable service. It is impressed upon that as per the place of provision of service rules 2012, it shall be the location of the recipient of service. In the present case, the recipients are located in India within the taxable territory, hence, the services provided are taxable. Entry 5A in the Mega Notification as inserted vide Notification No.14/2014 dated 20.08.2014 is relied upon under which the services provided by the, a private package tour operator is taxable. A Two Member Bench of the Tribunal comprising Dr Rachna Gupta, Judicial Member and PV Subba Rao, Technical Member observed that “it also becomes clear that the non-registration of the appellant was due to its bonafide belief for the impugned activity/ service to not to be taxable. Question of imposition of penalty doesn't at all arise. We rather consider it as a reasonable explanation and thus invoke section 80 of the Central Excise Act while setting aside the order of imposition of penalty upon the appellants. In view of the entire above discussion the order under challenge is hereby set aside.” “The appellant itself conducts the whole tour and ceremony thus exempted through 5b of the notification from paying service charge. Further we observe that no service tax is chargeable on impugned tour service in light of Board circular No. 117/11/2009-ST dated 30.10.2009. That service tax is not chargeable on the services provided in respect of tour undertaken for carrying out Hajj pilgrimage in Saudi Arabia by Indian pilgrims considering these as export of service” the Bench noted. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Service Tax not Leviable on Tour Services for Hajj Pilgrimage in Saudi Arabia by Indian Pilgrims: CESTAT [Read Order]

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