2011 (9) TMI 829 - AT - Service Tax

Out Bound Tours - department has held that the entire amount collected from the tourists including airfare to-and-fro and towards expenses incurred in connection with arrangements like hotel stay and sight seeing was to be included under the category of Tour Operator Services Held that - Board s Circular F. No. B. 43/10/97-TRU, dated 22.8.1997 has treated the activities of out-bound tours as outside the purview of service tax. the service tax undisputedly stands paid on airfares from India to the first destination in foreign country and for airfares from last destination abroad to first destination in India , as air travel services. pre-deposit waived

Summary

Issues:
Interpretation of Service Tax liability for Out Bound Tours

Analysis:
The judgment revolves around the interpretation of Service Tax liability concerning Out Bound Tours. The applicant, engaged in arranging tours within and outside India, faced a dispute regarding the categorization of services for taxation purposes. The department contended that the entire amount collected from tourists, including airfare and expenses for hotel stay and sightseeing, should be classified under "Tour Operator Services," leading to a substantial demand for Service Tax, interest, and penalties. The applicant argued that activities primarily took place outside India, coordinating with foreign counterparts, and cited a Board's Circular exempting out-bound tours from service tax. The Tribunal, after considering submissions and records, found that the planning and arrangements for out-bound tours involved coordination with agencies outside India. Additionally, they noted that service tax had already been paid for specific airfares. Relying on the Board's Circular and a previous stay order in a similar case, the Tribunal waived the pre-deposit of dues and stayed the recovery until the appeal's disposal. Due to the significant implications, an out-of-turn hearing was ordered for the appeal, along with another case involving a similar issue, scheduled for a specific date.

This judgment highlights the importance of interpreting Service Tax liability concerning specific services, such as Out Bound Tours, based on the nature and location of activities involved. It emphasizes the relevance of official circulars and previous decisions in guiding such interpretations. The Tribunal's decision to waive pre-deposit and stay recovery underscores the need for a thorough analysis of facts and legal provisions to ensure fair treatment and adherence to established guidelines. The expedited hearing of the appeal demonstrates the Tribunal's recognition of the urgency and significance of the matter, aiming to provide timely resolution and clarity on the disputed tax liability for Out Bound Tours.