The West Bengal Authority for Advance Ruling in an application filed by Golden Vacations Tours and Travels held that the applicant engaged in providing the standalone service of arranging client’s accommodation is classifiable as ‘Support Service’ and not as ‘Tour Operator’. Also, ITC shall be available on the same.
The applicant, a tour operator is seeking a ruling of the Authority on the classification of service of arranging client’s accommodation in hotels. Additionally, it seeks a ruling on the issue that whether Input Tax Credit (hereinafter referred to as ‘ITC’) shall be available on the GST the hotels charge on it.
The Applicant by referring to the definition of a “tour operator” stated under Explanation to Sl. No. 23(i) of Notification No. 11/2017 dated 28/06/2017 which means a person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation) along with others.
The revenue submitted that the applicant’s service shall be classifiable under SAC 9985 i.e. tour operating service procured from another tour operator.
The Authority constituting of the Bench of Hon’ble Members Mr. Parthasarathi Dey and Ms. Susmita Bhattacharya emphasized that the applicant is merely engaged in arranging the client’s accommodation in hotels and held that such a service of arranging accommodation as a standalone business cannot be classified as tour operating under Sl No. 23(i) of the Rate Notification wherein the definition of tour operator prescribes that the arrangement of accommodation might be provided as add-ons, but that is not the essence of the tour operating service.
Further, while analyzing competing entries to classify the service, the Authority referred to the entry of ‘Accommodation Service’ under SAC 996311 which is limited to the one provided by the hotels, guest house,… and to that of ‘Support Services’ under SAC 998552 which include arranging reservations for accommodation services for domestic accommodation, accommodation abroad etc.
It was held that the Applicant’s supply is specifically covered by the entry of ‘Support Service’ and, therefore, taxable under Sl No. 23(iii) of the Rate Notification. With respect to the second issue concerning the availability of ITC, it was held that the Applicant is eligible to claim the ITC as admissible under the law.
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