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2019 (8) TMI 90 - AAR - GSTLevy of GST - Accommodation services - GST on Service Fee / Convenience Fee charged by the applicant - pure agent - Tour Operator Services - Is there any option available to a Tour Operator to either charge GST@ 5% (with no ITC) or charge GST @ 18% (with full ITC)? Whether the applicant is acting as an agent defined under Section 2(5) of the CGST Act, 2017 while booking hotel accommodation in foreign countries for its clients in India? - HELD THAT - From the combined reading of Sections 2(5), 2(105), 2(107), 22 and 24 of the CGST Act, 2017, it is clear that the applicant is covered in the definitions of Agent , Supplier and Taxable Person . Further, the applicant is falling under the categories of persons under Section 22 and also under Section 24 requiring compulsory registration while booking Hotel Accommodation in foreign countries for its clients in India. Pure Agent - Whether in the case of above mentioned booking of 'Accommodation only' Services, the applicant is acting as a pure agent in respect of amount received for hotel room, while supplying the main taxable service of booking of hotel rooms, for which it gets service fee / convenience fee from Indian B2B or B2C clients? - HELD THAT - as far as service of hotel accommodation is concerned, the same are supplied by the applicant to their clients on behalf of foreign hotels / hotel aggregators as their agent. Since, the applicant is charging the same amount from their client as is paid by them to the hotel aggregators and all other conditions of pure agent are also satisfied, the value of hotel accommodation cannot be added to value of their main service which is booking of hotel accommodation. Rate of tax on booking of hotel accommodation - HELD THAT - The consideration for rendering such services is partly received from the Indian clients as service fee / convenience fee and partly received from the foreign Hotel aggregator as target based sales commission. The applicant has not disputed their liability to pay GST @ 18% on all such amounts whether received from the clients or from the Hotel Aggregators. Who is liable to discharge GST liability - whether GST is payable on the amount received by the applicant from the clients as pure agent and is paid by them to the foreign hotel / hotel aggregator - HELD THAT - in respect of such services, the applicant is covered in the definition of Agent , 'supplier' and Taxable Person' under sections 2(5), 2(105) and 2(107) respectively of CGST Act, 2017. Hence, any liability to pay GST on such amount has to be discharged by the applicant. Rate of Tax on tour operators service s - Whether any option is available to the 'Tour operators' to either pay GST @ 5% (with no ITC) or to pay GST @ (with full ITC)? - HELD THAT - The tour operators services are covered under entry (i) of S. No. 23 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 and they are required to pay GST @ 5% (2.5% CGST SGST) (without ITC) subject to fulfilment of conditions and they are not covered under entry (ii) of the S. No. 23 of the said Notification before 25.01.2018 and entry (iii) of S. No. 23 of the said Notification from 25.01.2018 and hence option to pay GST @ 18% (9% CGST 9% SGST) (with ITC) is not available to them.
Issues Involved:
1. GST applicability on 'Accommodation Only' services. 2. Option for a 'Tour Operator' to charge GST at different rates. Detailed Analysis: Issue 1: GST Applicability on 'Accommodation Only' Services Facts and Applicant's View: - The applicant, engaged in outbound tours, provides 'Accommodation Only' services by booking hotel rooms through various hotel aggregators for B2B clients. - The applicant claims to act as a "Pure Agent," charging GST at 18% only on its Service Fee/Convenience Fee and not on the total invoice value. Legal Provisions and Analysis: - Section 2(5) of the CGST Act, 2017 defines an "agent" as someone who supplies or receives goods or services on behalf of another. - The applicant books hotel accommodations based on the client's requirements, and invoices are issued in the applicant's name, but the cost is passed on to the client without any markup. - According to Section 2(105) of the CGST Act, a "supplier" includes an agent acting on behalf of another. - Under Section 9 of the CGST Act, GST is payable by the taxable person on the transaction value of the supply of goods or services. Conclusion: - The applicant qualifies as an "agent" and "supplier" under Sections 2(5) and 2(105) of the CGST Act, respectively. - The applicant is required to be registered under Sections 22 and 24 of the CGST Act. - The applicant acts as a "Pure Agent" as per Rule 33 of the CGST Rules, 2017, fulfilling conditions such as making payments on behalf of the recipient and not holding any title to the goods or services procured. - GST is payable at 18% on the Service Fee/Convenience Fee, not on the total invoice value, provided the conditions of a "Pure Agent" are satisfied. Issue 2: Option for a 'Tour Operator' to Charge GST at Different Rates Facts and Applicant's View: - The applicant, acting as a tour operator, contends that they should have the option to charge either GST at 5% (without ITC) or 18% (with full ITC) to pass on the GST input benefit to customers. Legal Provisions and Analysis: - Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, specifies that 'Tour Operators Services' are subject to GST at 5% (with no ITC), provided certain conditions are met. - These conditions include not taking credit of input tax charged on goods and services used in supplying the service and issuing a bill inclusive of charges for accommodation and transportation. - The notification was amended on 25.01.2018, but the core conditions for availing the 5% GST rate remain unchanged. Conclusion: - The applicant's contention to have an option to charge GST at 18% (with ITC) is not supported by the notification. - 'Tour Operators Services' are specifically covered under entry (i) of S. No. 23 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, and they are required to pay GST at 5% (without ITC) subject to fulfillment of conditions. - The option to pay GST at 18% (with ITC) is not available to 'Tour Operators Services' as they are not covered under entry (ii) or (iii) of the said notification. Ruling: 1. The applicant is liable to pay GST at 18% on the Service Fee/Convenience Fee charged for 'Accommodation Only' services, not on the total invoice value, provided the conditions of a "Pure Agent" are satisfied. 2. The applicant, as a tour operator, must pay GST at 5% (without ITC) as per entry (i) of S. No. 23 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, and does not have the option to pay GST at 18% (with ITC).
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