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2024 (5) TMI 371 - AT - Service TaxNon-payment of service tax - Business Auxiliary Service - activity of using Galileo CRS system - Tour Operator s Service - services of domestic and international hotel bookings - Banking and Other Financial Service - activity of sale/purchase of foreign exchange by the appellant - extended period of limitation. Service Tax with respect to Business Auxiliary Services allegedly rendered to M/s. GIPL - HELD THAT - What is important to notice is that for an activity to qualify as promotional , the person before whom the promotional activity is undertaken should be able to use the services. The passenger cannot directly use the CRS software provided by the Company to book an airline ticket. It cannot, therefore, be said that a travel agent is promoting any activity before the passenger. It has also been held that mere selection of software for exercising of a choice would not result in any promotional activity. The department is opined to have failed to point out any activity undertaken by an Air Travel Agent that promotes the business of the CRS companies - the demand of service tax on the amount of incentives received by appellant from GIPL/ITQPL under Business Auxiliary Service has wrongly been confirmed. The same is hereby set aside. Service Tax with respect to Tour Operator s Service - HELD THAT - In view of the statutory definition of tour , considered in the context of the legal position demarcating the limits of the application and reach of provisions of the Act, it is clear that a journey from one place to another beyond the territorial limits of India, even if amounting to an activity comprised within the ambit of the definition of tour operator , would not amount to a taxable service under the provisions of the Act. On the aforesaid analysis we conclude that the consideration received for operating and arranging outbound tours, even if falling within the scope of the amended definition of tour operator ; (provided by the assessees and consumed by their tourist customers beyond Indian territory), is not liable to levy and collection of Service Tax, under provisions of the Act - This issue is otherwise no more res integra as stands decided by the Larger Bench of this Tribunal in M/S COX KINGS INDIA LTD., M/S TRAVEL CORPORATION OF INDIA LTD. AND M/S SWAGATAM TOURS PVT. LIMITED VERSUS CST, NEW DELHI 2013 (12) TMI 1024 - CESTAT NEW DELHI where it was held that 'Planning and scheduling of outbound tours may not be components of services provided to tourists, would amount to an incidental activity undertaken as a prelude to providing tours and thus the service if at all provided is to the service provider itself. Nevertheless, since organizing and/or arranging of outbound tours are components of the service provided to tourists and these are the primary and substantive purposes of the service provided and consumed, the composite activity of planning, scheduling, organizing or arranging tours falls within the scope of the taxable service defined in Section 65(115) of the Act.' - thus, tax demand of Rs.6,54,828/- on outbound tours has wrongly been confirmed. Service tax on the amount received for Eurail passes for the travelers - HELD THAT - The said service charges collected by the appellant from the tourist is leviable to Service Tax under Tour Operator's Service . It is apparent that appellant is merely re-selling Eurail passes and is in no way concerned for arranging tours in Europe by Eurail. Appellant is merely purchasing such passes from other Indian tour operators and reselling them to the tourists. They are earning small amount on resale of such passes as commission. Selling Eurail passes is merely selling a commodity or a service and there is no general service tax levy on resale of services. Further in the light of above discussion about definition of tour operator , the present activity does not get covered. Hence the demand on this count is not sustainable. The order under challenge is set aside to this extent. The service tax on account of allegedly rendering the Banking and other Financial Services in respect of sale/purchase of foreign exchange - HELD THAT - The demand on this count has already been dropped except for Rs.2,037/-. It is observed that the foreign currency has been received by the appellant while planning, scheduling, organizing, etc., the outbound tours. It cannot be ruled out that receiving consideration in convertible foreign exchange facilitates and encourage inflow of currency into India and simultaneously avoid outflow of Indian currency i.e. the purpose is to augment foreign exchange earnings. There are no evidence on record which may show that the appellant was dealing with sale and purchase of foreign exchange directly except that the foreign exchange dealer from whom the passenger purchases the foreign exchange adds a profit on the foreign currency sale rate and reimburses the same to the appellant - That entry 'Banking and other Financial Services under the amended Finance Act, 2008 in no way covers the said transaction of the appellant. The only entry could be under (a) (iv), (vii) or under (b) of Section 66(12) of the Act. However, the appellant states that they are not having any license for brokerage in foreign exchange and they are not carrying out any such activity. Therefore, neither under (a) (iv) or under (a) (ix) or under (b), there is a case for bringing the impugned transaction under the category of Banking and other Financial Services. The demand is therefore liable to be set aside. Invocation of extended period for issuing show cause notice - HELD THAT - The activities as that of using CRS of GPIL/ITQPL etc. was under consideration and at the relevant point of time had the contradictory decisions. So is true as far as the activity of Tour Operator s Services is concerned. During the relevant time the decisions were in favour of the assessee-appellant. The said confusion about the nature of the impugned activities/services is sufficient to hold that appellant did not take service tax registration on the bona fide ground. There are nothing on record which may prove a positive act on the part of the appellant about mala fide intent to evade the payment of duty - the confirmation of demand for the period beyond the normal period is liable to be set aside as the extended period is not invokable in the given set of circumstances. The order confirming the demand on service tax on inbound tours and domestic tours under Tour Operator s Services is upheld, however, for the normal period. Rest of the demand is held to be non-sustainable - Appeal allowed in part.
Issues Involved:
1. Taxability under "Business Auxiliary Service" for using Galileo CRS. 2. Taxability under "Tour Operator's Service" for domestic and outbound tours. 3. Taxability on incentives received for selling Eurail passes. 4. Taxability under "Banking and Other Financial Services" for sale/purchase of foreign exchange. 5. Invocation of extended period for issuing the show cause notice. Summary: 1. Business Auxiliary Service: The appellant was alleged to have promoted GIPL/ITQPL by using their Computerized Reservation System (CRS) and receiving incentives. The Tribunal referred to the Larger Bench decision in *Kafila Hospitality and Travels Pvt Ltd Vs. Commissioner of Service Tax, Delhi* (2021) and held that the appellant merely used the CRS and did not promote it. Thus, the demand for service tax under "Business Auxiliary Service" was set aside. 2. Tour Operator's Service: The appellant was accused of providing taxable services for domestic and outbound tours. The Tribunal analyzed the definition of "tour operator" u/s 65(115) of the Finance Act and concluded that the appellant's activities fell under this category. However, for outbound tours, it was held that these services, provided outside India, qualify as export of services and are not liable to service tax as per the Board Circular No. 36/4/2001 and the Larger Bench decision in *Cox & Kings Limited Vs. Commissioner (TAR) - Mumbai* (2023). Consequently, the demand for outbound tours was set aside, while the demand for domestic tours was upheld for the normal period. 3. Eurail Passes: The appellant was alleged to have arranged tours in Europe by selling Eurail passes. The Tribunal found that the appellant merely resold Eurail passes and did not arrange tours. Thus, the commission earned on resale was not subject to service tax under "Tour Operator's Service." The demand on this count was set aside. 4. Banking and Other Financial Services: The appellant was accused of rendering taxable services in respect of sale/purchase of foreign exchange. The Tribunal observed that the appellant did not directly deal with foreign exchange but facilitated its purchase through authorized dealers. Referring to CBEC Circular No. 96/7/2007-S.T., it was held that such activities do not fall under "Banking and Financial Services." The demand on this count was set aside. 5. Extended Period: The Tribunal noted that the appellant's activities were under consideration with contradictory decisions at the relevant time. There was no evidence of mala fide intent to evade tax. Hence, the invocation of the extended period for issuing the show cause notice was not justified. The demand for the period beyond the normal period was set aside. Conclusion: The order confirming the demand for service tax on inbound and domestic tours under "Tour Operator's Services" was upheld for the normal period. The rest of the demands were held to be non-sustainable, and the order was set aside to that extent. The appeal was partly allowed.
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