2008 (8) TMI 52 - AT - Service Tax

Services of transport in tourist vehicles - supplementary services of arranging guide services, monument visit services, porter services, food services, general assistance services etc. come within the purview tour operator s service and were liable to service tax - Appellant are guilty of wilful suppression of the relevant information - larger period u/s 73 (1) of the Finance Act has been correctly invoked penalty u/s 76 and 78 is imposable

Summary

Issues Involved:
1. Liability of service tax on supplementary services.
2. Definition and scope of "tour operator" services.
3. Calculation of gross amount for service tax.
4. Invocation of the extended period of limitation.
5. Imposition of penalties under Sections 76 and 78 of the Finance Act, 1994.

Detailed Analysis:

1. Liability of Service Tax on Supplementary Services:
The primary issue is whether the amounts received by the appellant for supplementary services (guide services, monument visit services, porter services, food services, general assistance services, etc.) are liable to service tax. The Revenue argues that the appellant must pay service tax on the gross amount received, including amounts for supplementary services. The appellant contends that these supplementary services are charged on an actual basis and should not be considered part of the tour operator services.

2. Definition and Scope of "Tour Operator" Services:
The definition of "tour operator" underwent changes during the disputed period. From 01/04/02 to 09/09/04, the definition was restricted to operating tours in tourist vehicles. Post 10/09/04, it included planning, scheduling, organizing, or arranging tours, which may include accommodation, sightseeing, and similar services. The tribunal concluded that even during the earlier period, the term "in relation to a tour" was broad enough to encompass supplementary services, making them liable for service tax.

3. Calculation of Gross Amount for Service Tax:
The appellant argued that the gross amount of Rs. 24,85,36,696/- included amounts not related to the provision of supplementary services, such as inter-branch billing and temporary advances to tour escorts. The tribunal agreed that these amounts should not be included in the gross amount for service tax calculation and directed the adjudicating authority to rework the service tax liability excluding these amounts.

4. Invocation of the Extended Period of Limitation:
The appellant claimed there was no willful misstatement or suppression of facts to justify the extended limitation period under Section 73 (1) of the Finance Act, 1994. The tribunal held that the appellant's failure to disclose amounts received for supplementary services in their ST-3 returns, despite clear instructions from the Board, justified the invocation of the extended limitation period.

5. Imposition of Penalties under Sections 76 and 78 of the Finance Act, 1994:
The tribunal upheld the imposition of penalties under Sections 76 and 78, citing the appellant's willful suppression of relevant information. However, the quantum of the penalty under Section 78 was remanded to the Commissioner for re-determination based on the revised service tax liability.

Conclusion:
The tribunal concluded that supplementary services provided by the appellant were liable to service tax throughout the disputed period. The extended limitation period was rightly invoked, and penalties under Sections 76 and 78 were justified. The case was remanded to the Commissioner for re-quantification of the service tax liability and re-determination of the penalty under Section 78. The quantum of penalty under Section 76 was upheld.

Pronounced in open court on 25.08.2008.