In a recent ruling, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that tour planning and accommodation services rendered by operators are subject to service tax.
In this case, the appellant, New High Flying Travels Pvt. Ltd., provides taxable services related to travel and tours and is registered under the categories of ‘tour operator service,’ ‘air travel agent service,’ and ‘business auxiliary service.’
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The appellant has filed two separate appeals challenging the Order-in-Appeal, dated 30.09.2016, which confirmed the service tax demand along with interest and penalties.
One of the main issues involved in this appeal was whether the activity of providing services in relation to outbound tours in locations outside the territory of India, including the operation of tours and planning, scheduling, organizing, 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 is it liable to service tax.
The bench relied on the case of M/s Cox and Kings Ltd, which was decided by the larger bench of the Tribunal. The Bench noted that from 10.09.2004, the definition of ‘tour operator service’ was expanded to include planning, scheduling, organizing, or arranging accommodation, sightseeing, and similar services. While the tour itself was not taxable, related arrangements were covered under this definition.
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The bench, relying on the above-mentioned judgment, observed that the appellant’s services go beyond the tour itself and include activities that come under the amended definition of ‘Tour Operator Service’ and thus are taxable.
The CESTAT bench comprising Binnu Tamta ( Judicial Member ) and Hemambika R. Priya ( Technical Member ) held that the services of planning, scheduling, organizing, 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 also held that the appellant was liable to pay service tax on outbound tours, which they had not paid during the period 2010–12, and was liable to pay interest under Section 75 of the Finance Act, 1994.
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Mr. S. K. Wadhwa was the learned counsel for the appellant, and Mr. S. K. Meena was the authorized representative for the Revenue.
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