2017 (4) TMI 1373 - AT - Service Tax

Reverse charge mechanism - Tour operator services - respondent performed part of their service outside - export of services or not? - Circular of the Board dated 12.10.2007 - Held that - Admittedly, in respect of respondent s own case on identical set of facts, for the previous period, COMMISSIONER, SERVICE TAX, DELHI. VERSUS DEWAN TRAVELS PVT. LTD. 2017 (3) TMI 794 - CESTAT NEW DELHI , the Tribunal has held that the tour operator services in case of outbound tours are not taxable - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Liability of the respondent for service tax under the category of "tour operator services" during a specific period.
2. Whether the services provided by the respondent qualify as export of service and are thus not liable to service tax.
3. Fulfillment of conditions under Rule 3(2) of Export of Service Rules, 2005.
4. Comparison of the present case with the earlier case of the respondent where the demand was dropped.
5. Interpretation of relevant legal provisions and previous judicial decisions regarding the taxability of tour operator services for outbound tours.

Analysis:

1. The case involved a dispute regarding the liability of the respondent for service tax under the category of "tour operator services" for a specific period. The original authority had dropped the demand based on the argument that part of the services were performed outside India, qualifying them as export of service not liable to service tax.

2. The Revenue contended that the services provided by the respondent did not fulfill the condition of payment in foreign exchange, thus not meeting the criteria for export of service under Rule 3(2) of Export of Service Rules, 2005. It was argued that the services of organizing outbound package tours were performed in India and not outside the country.

3. The respondent's consultant highlighted that in a previous case for an earlier period, the demand was dropped by the original authority, and the Tribunal upheld this decision. The consultant argued that the facts of the present case were identical to the earlier case, indicating no merit in the Revenue's appeal.

4. The Tribunal referred to its earlier decision in a similar case involving COX Kings India Ltd. vs. Commissioner of Service Tax, where it was held that the operation of outbound tours and related activities fell outside the definition of "tour operator." The Tribunal emphasized that services consumed beyond Indian territory were not leviable to service tax, as the taxable event was the provision of service, not its consumption.

5. Based on the previous judicial decisions and interpretations of the law, the Tribunal found no merit in the Revenue's appeal and dismissed it accordingly. The Tribunal's decision was in line with the principles established in earlier cases regarding the taxability of tour operator services for outbound tours, reinforcing the non-taxability of such services when consumed outside Indian territory.

In conclusion, the judgment upheld the original authority's decision to drop the demand for service tax against the respondent, emphasizing the non-taxability of tour operator services for outbound tours consumed beyond Indian territory based on established legal principles and precedents.