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2012 (5) TMI 346 - AT - Service TaxPackage tour services - Tour operator - valuation - gross value - inclusion - TTD darshan ticket charges, RFC entry fees, hill transportation charges and waterfleet charges - held that - TTD darshan, sightseeing in RFC etc. are supplementary services rendered by the appellant in relation to package tour, the collections for the same from the tourists cannot be typified as reimbursements . - Such collections do not answer the test laid down in the above order of the Tribunal and are necessarily to be part of the taxable value. - The decision in Scott Wilson Kirkpatrick s case (2006 (10) TMI 4 (Tri)) was based on a circular of Director-General of Service Tax. Nobody has relied on any DGST circular before us. - Decided against the assessee. Benefit of abatement - held that - The appellant is entitled to abatement to the extent of 60% on the gross taxable value (including all the said charges) under Notification No. 39/1997-ST up to 28/02/2006 and under Notification No. 1/2006 from 01/03/2006 to 22.8.2007. They can claim 75% abatement under the latter Notification (as amended) from 23.8.2007. Cenvat credit - nexus between output and input service - held that - the credit In question cannot be allowed to the appellant inasmuch as, in this appeal, they have not brought out any nexus between the so-called input services (architect services and technical services) and the tour operator s service. Their claim that they are eligible for the credit under the CENVAT Credit Rules 2004 remains Ipse dixit as they have not shown that the said services fell within the ambit of the definition of input service under rule 2(1) of the CENVAT Credit Rules 2004. - Decided against the assessee. Extended period of limitation - held that - The definition of tour operator came to be amended twice during the material period and Notification No. 39/97-ST was superseded by Notification No.1/06-ST and the latter was amended by Notification No.38/07-ST, all these during the material period. It appears, these changes created confusion in the mind of the appellant on the question whether the charges/fees collected by them from tourists for TTD darshan, RFC visit, boat cruise etc. were to be included in the gross taxable value of tour operator s service for the purpose of claiming abatement. In our view, in these circumstances, it was not correct on the part of the Department to allege that the appellant had wilfully suppressed facts with intention to evade payment of service tax. - Decided in favor of assessee. Penalties - benefit of section 80 - reasonable cause - held that - the appellant can legitimately claim the benefit of Section 80 of the Act. Both the penalties are liable to be set aside on this ground.
Issues Involved:
1. Inclusion of train fare, TTD darshan ticket charges, RFC entry fee, hill transportation charges, and water fleet charges in the taxable value of tour operator service. 2. Eligibility for abatement under various Notifications. 3. Short-payment of service tax on mandap keeper service. 4. Irregular utilization of CENVAT credit. 5. Invocation of the extended period of limitation. 6. Penalties under Sections 76, 77, and 78 of the Finance Act, 1994. 7. Cum-tax value consideration. Detailed Analysis: 1. Inclusion of Supplementary Charges in Taxable Value: The main dispute revolves around whether supplementary charges such as train fare, TTD darshan ticket charges, RFC entry fee, hill transportation charges, and water fleet charges should be included in the taxable value of tour operator service. The Tribunal held that these charges are part of the taxable value of tour operator service. The definition of 'tour operator' includes organizing or arranging tours, which encompasses supplementary services like sightseeing, temple visits, and boat cruising. The Tribunal relied on the decision in Touraids (I) Travel Services, which held that supplementary services are covered by the definition of 'tour operator's service' and attract service tax. 2. Eligibility for Abatement: The appellant claimed abatement under Notification No. 39/97-ST and subsequent notifications. The Tribunal held that abatement is available on the gross amount charged, including supplementary charges. For the period up to 22.08.2007, 60% abatement was allowed under Notification No. 39/97-ST, and from 23.08.2007, 75% abatement was allowed under Notification No. 1/2006-ST. The Tribunal rejected the argument that supplementary charges should be excluded from the gross amount for abatement purposes. 3. Short-payment of Service Tax on Mandap Keeper Service: The appellant argued for the adjustment of excess tax paid on tour operator service against the demand for mandap keeper service. The Tribunal found that the Commissioner's reasoning for denying the adjustment was beyond the scope of the show-cause notice. The Commissioner should have determined whether there was excess payment of service tax on tour operator service to allow adjustment. 4. Irregular Utilization of CENVAT Credit: The Tribunal upheld the denial of CENVAT credit of Rs. 8,11,058/- availed on architect and technical services used for constructing hotels. The appellant failed to establish a nexus between these services and the output service of tour operator. The Commissioner's decision to deny the credit was affirmed despite the additional reasoning provided being beyond the show-cause notice. 5. Invocation of Extended Period of Limitation: The Tribunal held that the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994, was not invocable. The appellant, a government undertaking, held a bona fide belief regarding their tax liability, and the dispute arose from conflicting interpretations of statutory provisions. The Tribunal relied on Supreme Court decisions indicating that extended limitation is not applicable where the department was aware of the facts or where the assessee had a bona fide belief in their legal position. 6. Penalties: The Tribunal set aside the penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994. The appellant's bona fide belief constituted a reasonable cause under Section 80 of the Act, justifying the waiver of penalties. 7. Cum-tax Value Consideration: The Tribunal directed the Commissioner to consider the appellant's plea that the service tax element should be excluded while computing the taxable value, in line with the explanation to Section 67 of the Finance Act, 1994, and relevant case law. Final Orders: - Appeal No. ST/387/2007: Dismissed. - Appeal No. ST/138/2009: Requantification of service tax for the normal period, considering cum-tax value and adjustment plea. CENVAT credit demand affirmed. Penalties set aside. - Appeal No. ST/424/2009: Requantification of service tax for the normal period. Penalties set aside. - Appeal No. ST/2146/2010: Demand of service tax and interest affirmed. Penalties set aside. - Appeal No. ST/954/2011: Remanded for decision on whether excess tax paid in 2006-07 can be appropriated towards the demand for April 2007. The Tribunal emphasized the need for the adjudicating authority to afford a reasonable opportunity to the appellant during the requantification process.
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