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2023 (9) TMI 78 - AT - Service TaxLevy of Service Tax - tour operator service - amount charged for the onward/return journey which was not included in the value of tour operator service towards inbound tour - value of outbound tour services rendered - HELD THAT - It emerges that any person who is engaged in the cumulative activities like planning, scheduling, organising or arranging tours by any mode of transport, is considered to be covered under tour operator service. Apparently, there is nothing in the definition to include a person whose activity is nothing other than mere trading in air tickets. It is an admitted fact on record that insofar as the other activities are concerned, the appellant has admitted and paid applicable Service Tax. It is also an undisputed fact that the appellant is not a member of or agent of IATA and that it is not the case of the Revenue that the appellant had earned any commission from IATA or any other airlines when it sold or traded in air tickets. Moreover, from the definition of tour operator service, the same involves a gamut of activities and there is nothing to suggest that trading in air tickets per se invited Service Tax. The demand of Service Tax on the consideration and for booking of tickets in respect of domestic travel is not a taxable event and hence, to this extent, the direction of the Commissioner (Appeals) cannot sustain - the impugned order set aside, by holding that the appellant is not liable to pay Service Tax on the mark-up or margin earned for booking tickets with regard to domestic travels. Appeal allowed.
Issues involved:
The issues involved in the judgment are the liability of Service Tax on tour operator services provided by the appellant, specifically related to the booking of air tickets for inbound and outbound tours, and the applicability of Service Tax on the margin earned by the appellant on the sale of air tickets for domestic travel. Liability of Service Tax on Tour Operator Services: The appellant, registered as a tour operator, organized tours for customers, including booking air tickets and providing other services for both inbound and outbound tours. The appellant raised separate bills for air ticketing and other services, paying Service Tax on accommodation/sightseeing services for inbound tours. However, they did not include air ticketing charges and other expenses in the value of tour operator services for inbound tours. For outbound tours, the appellant paid Service Tax on some services rendered but considered others as exempted. A Show Cause Notice was issued demanding Service Tax for various services provided during tours. The Order-in-Original confirmed the demands, leading to an appeal by the appellant before the Commissioner (Appeals). Applicability of Service Tax on Margin Earned on Air Ticket Sales: During the appeal proceedings, the appellant argued that they paid Service Tax on the margin earned from selling air tickets for domestic travel. They contended that trading air tickets, bought from authorized agents, was not a taxable event as it did not involve tour planning activities. The first appellate authority partially allowed the appeal, exempting Service Tax on outbound tour tickets used outside India but confirming liability for domestic travel tickets to the extent of the margin earned. The appellant appealed against this decision, leading to the present judgment. Judgment: The definition of tour operator service under the Finance Act, 1994, includes persons engaged in planning, scheduling, and organizing tours by any mode of transport. The definition does not explicitly cover individuals solely involved in trading air tickets. The appellant's case focused on trading air tickets without additional tour planning activities. It was acknowledged that the appellant paid Service Tax on other activities and was not associated with IATA or airlines for commissions. The Tribunal held that trading air tickets alone did not attract Service Tax under tour operator services. Therefore, the demand for Service Tax on domestic travel ticket bookings was deemed not applicable, and the direction of the Commissioner (Appeals) was set aside. The appeal was allowed, granting consequential benefits as per the law. Separate Judgment by the Judges: The judgment was delivered by Hon'ble Mr. P. Dinesha, Member (Judicial), and Hon'ble Mr. M. Ajit Kumar, Member (Technical) on 31.08.2023.
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