In a recent case, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the services of planning, scheduling, organising, or arranging tours, arrangements for accommodation, sightseeing, or other similar services as to operator service rendered by the appellant are chargeable to service tax under the Finance Act, 1944.
New High Flying Travels Pvt. Ltd., the appellant challenged the Order-in-Appeal which confirmed the demand of service tax along with interest and penalty. The appellant engaged in providing taxable services in relation to travel and tours is registered under the category of “Tour Operator Service”, “Air Travel Agent Service”, and “Business Auxiliary Service”. The services rendered by the appellant are broadly classified under the various categories like Domestic , Outbound, Business Auxiliary Service .
In respect of domestic category, there is no dispute, however, dispute pertains to outbound tours and BAS.
Under BAS, the appellant is receiving Computer Reservation System (CRS) incentive for booking of air tickets by using the software and hardware provided by the CRS company Galileo/Amadeus. In case of outbound tours, the appellant organises tours outside the territory of India for Indian tourist to facilitate them to visit various local places outside India.
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A Show cause notices were issued to the appellant for the period 01.10.2010 to 30.09.2011 and 01.10.2011 to 30.06.2012 for Rs. 2,84,406/- and Rs. 3,26,748/- respectively. On adjudication, the service tax amount as proposed was confirmed along with interest and penalty under section 76,77 and section 78 of the Act. Being aggrieved, the appellant had challenged the same before the Commissioner (Appeals), whereby the impugned order has been passed. SCN for the period 01.10.2011 to 30.06.2012 was remanded to the adjudicating authority as the service tax liability was not correctly assessed and hence the same is not under challenge.
Shri S. K. Wadhwa, counsel for the appellant and Shri S. K. Meena, the authorised representative for the Revenue.
The issue relating to the activity of providing services in relation to outbound tour in locations outside the territory of India, including the operation of tours and planning, scheduling, organising, or arranging of such tours falls within the ambit of “tour operator service‟, as defined under section 65(115) of the Finance Act, 1994 and thereby assessible to service tax under the provisions of the Act has now been considered by the Larger Bench of the Tribunal in M/s Cox and Kings Ltd , in the light of the amended definition of “tour operator‟, w.e.f. 10.09.2004.
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The basic contention raised therein by the assessee was that all the activities like planning, scheduling, organising or arranging tours by the appellant are aimed at the client enjoying the tour outside India and therefore as the services are consumed outside India service tax would not be leviable. The situs of tour operator service, in case of outbound tour is outside India.
The Bench observed that the definition of “tour operator service‟ underwent a change w.e.f. 10.09.2004 when the amended definition introduced the services such as planning, scheduling, organising, or arranging towards arrangements for accommodation, sightseeing, or other similar services as to operator service. Though the tour itself was not a taxable event, but the activities related to arrangement of a tour would fall within the said definition.
It was found that the appellant vide their letter intimated the department that they were receiving the amount on account of providing the international hotel booking, car services, U-rail or rail services, and Visa services under the category of international tour package. The nature of services provided by the appellant are not restricted to the tour itself but are extended to include other activities which in terms of the amended definition of “Tour Operator Service‟ are taxable.
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The two member bench of Binu Tamta, Member (Judicial) Hemambika R. Priya, Member (Technical) viewed that one of the prerequisites for determining a service to be export service is that payment for rendering such service is received in convertible foreign exchange is not satisfied. The adjudicating authority has categorically recorded a finding that the appellant is not receiving the payment against the provision of outbound tours in foreign exchange and therefore the provisions of Export of Service Rules, 2005 are not applicable.
The Tribunal held that the services of planning, scheduling, organising, or arranging tours, arrangements for accommodation, sightseeing, or other similar services as to operator service rendered by the appellant are chargeable to service tax under the Act.
The bench further held that the appellant is liable to pay service tax on outbound tours service which they have not paid/short paid during the period, 2010-12, they are liable to pay interest in terms of section 75 of the Act.
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