No Service Tax Payable On Consideration Received For Operating And Arranging Outbound Tours: CESTAT

The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that no service tax is payable on a tour operator's services provided beyond the territorial limits of India.The bench of Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that, as per Section 65(105)(n) of the Finance Act and in view of the statutory definition of "tour," considered in the context of the legal position demarcating the limits of the application and reach of provisions of the Act, it is clear that a journey from one place to another beyond the territorial limits of India, even if amounting to an activity comprised within the ambit of the definition of "tour operator," would not amount to a taxable service under the provisions of the Act.The appellant/assessee is a private limited company registered with the Service Tax Department for providing “Air Travel Agent Service." The officers of the Anti-Evasion Wing of Service Tax received intelligence that the appellant is also providing the taxable services of “Business Auxiliary Service," “Tour Operator's Service,” and “Banking and Other Financial Service” but is not paying service tax on the gross value received for providing the services. The department opined that since the appellant has acknowledged having provided outbound tours, the taxable service under the category of tour operator's service has been rendered by the appellants. The said services appear to have been provided with respect to domestic tours as well as international tours, both being taxable services, but the service tax has not been paid by the appellant during the period 01.04.2004 to 31.03.2009.The assessee contended that with respect to the demand for the services of domestic and international hotel bookings, the appellant is not covered under 'tour operator' as is defined under Section 65(115) of the Finance Act (hereinafter referred to as the Act). The activity of the appellant company is not at all the activity of planning, scheduling, organizing, or arranging tours in any combination thereof. Accordingly, there arises no tax liability for the appellant vis-à-vis bookings for domestic tours. .The department contended that with respect to the service alleged to be a tour operator's service rendered by the appellant, it is mentioned that the definition of tour operator's service has undergone a change since September 10, 2004. The amended definition introduces the service as that of planning, scheduling, organizing, or arranging tours, arrangements for accommodation, sightseeing, or other similar services to be called a tour operator's service. Hence, the tour itself is no longer a taxable event, but all the aforesaid activities related to the arrangement of a tour are covered under the definition. Hence, the service tax liability of Rs. 6,54,828/- has rightly been confirmed.Section 65 (113) defines “tour' to mean a journey from one place to another, irrespective of the distances between such places. Section 64 (105)(n) enumerates the taxable service as any service provided or to be provided to a person by a tour operator in relation to tour provision that has continued unamended since its inception in 1997. Thus, it is clear that the definition provides that a tour operator would include any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act or rules made thereunder, in addition to a person engaged in the business of planning, scheduling, organizing, or arranging tours by any mode of transport.The tribunal held that the consideration received for operating and arranging outbound tours, even if falling within the scope of the amended definition of "tour operator” (provided by the assessees and consumed by their tourist customers beyond Indian territory), is not liable to levy and collect service tax under the provisions of the Act.Counsel For Petitioner: Prabhat Kumar Counsel For Respondent: Jaya KumariCase Title: M/s. Weldon Tours & Travels Pvt. Ltd. Versus Commissioner of Service Tax - DelhiCase No.: Service Tax Appeal No. 3884 of 2012 [DB]Click Here To Read The Order

No Service Tax Payable On Consideration Received For Operating And Arranging Outbound Tours: CESTAT

Mariya Paliwala

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Mariya Paliwala

No Service Tax Payable On Consideration Received For Operating And Arranging Outbound Tours: CESTAT

Mariya Paliwala

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INR 1099+GST

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Mariya Paliwala

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