2018 (9) TMI 656 - AT - Service Tax

Valuation - Tour Operator Service - inclusion of Hotel Booking in assessable value - whether in the case of Hotel Booking by a Tour Operator, the value there of is includible in the value of tour operator service or otherwise? Held that - On plain reading of definition or Tour Operator, pre and post amendment, it is clear that in the earlier definition the hotel accommodation was not covered which was brought into the definition w.e.f. 10.09.2004 in the amended definition. The Board also clarified the same vide its clarification dated 17.01.2005. In view of the clear position of law on tour operator no service tax is leviable before 10.09.2004. Since the period is covered upto 31.03.2005 the service tax and corresponding penalties, interest is payable for the period from 10.09.2004 onwards - appeal allowed in part.

Summary

Issues Involved:
Whether the value of hotel booking by a Tour Operator is includible in the value of tour operator service or not.

Analysis:

Issue 1: Inclusion of hotel booking charges in the value of tour operator service

The appellant argued that until 10.09.2004, the old definition of tour operator did not cover hotel booking within its scope. It was only after the amendment that hotel booking was explicitly included in the definition of a tour operator. The appellant referred to a clarification by the Board dated 17.01.2005, which stated that services like hotel booking were not covered under the old definition but were brought under the tour operator definition post-amendment. The appellant contended that no service tax could be demanded on hotel bookings under the definition of tour operator before 10.09.2004. The Tribunal examined both definitions, pre and post-amendment, and noted that the earlier definition did not include hotel accommodation, whereas the amended definition explicitly covered arrangements for accommodation. The Tribunal also considered the Board's clarification, affirming that service tax was not leviable before 10.09.2004. Consequently, the Tribunal modified the impugned order, holding that service tax and penalties were payable only from 10.09.2004 onwards, as the period under consideration extended until 31.03.2005.

In conclusion, the Tribunal partly allowed the appeal, ruling that the value of hotel booking by a Tour Operator is includible in the value of tour operator service from 10.09.2004 onwards, based on the amended definition and the Board's clarification, thereby clarifying the applicability of service tax in such cases.

This comprehensive analysis of the judgment addresses the core issue of whether hotel booking charges should be included in the value of tour operator services, providing a detailed examination of the legal provisions, definitions, and clarifications considered by the Tribunal in reaching its decision.