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2024 (7) TMI 1115 - AT - Service TaxClassification of service - Tour Operator Service or travel agent service? - gross amount received by the Appellant in facilitating booking of hotel accommodation against commission - period from April, 2006 to March, 2011 - Extended period of limitation - HELD THAT - A Bare reading of the above definitions of tour operator service would go to show that primary engagement or activity or business of a person is that of planning, scheduling, organising or arranging tours by any mode of transport covered by permit granted under the Motor Vehicle Act. 1988 or the rules made there under and in so doing i.e. while conducting tour arrangement, accommodation, if made, can be included within the definition of tour operator service but a stand alone provision for arrangement of accommodation in a hotel room can t alone put the service under the category of tour operator service - giving a proper meaning to the definition of tour operator service , which is admittedly not being carried out by the Appellant as a service provider, since conducting tour by tourist vehicle having permit is a condition precedent to include arrangement for accommodation and not such arrangement of accommodation would alone put the service in the category of tour operator service and therefore, SCN justifying activity of the Appellant falling under the category of tour operator service only because the word accommodation is used in the definition, is a mere allegation and substantiation of the same by the Commissioner is erroneous as not in conformity to the statutory provisions. Leviability of Service Tax on the alleged service of providing hotel accommodation by the Appellant - HELD THAT - It is noticed that learned Commissioner had avoided to give his finding on this specific issue by taking the classification to tour operator in which, hotel room accommodation was stated to be a composite service activity despite the fact that in the reply to the SCN, specific averment regarding non-taxability of hotel room accommodation before dated 01.05.2011 was made in para 3 of the said reply. We are in incomplete agreement to the fact that hotel room accommodation has been brought to Service Tax net w.e.f. 01.05.2011 and the same is an independent levy that stands without any link to tour operator service , unless it is a component of the same main service namely tour operator service - it is required to be mentioned here that prohibition on double taxation has emerged from principle of equity law for which even no constitutional recognition is required though in the Indian scenario for various taxation statute like Income Tax Act under Section 90 91 and in Indirect Tax, Double taxation avoid Agreement (DTAA) among the nation including India is available to contend such punity actions. Invocation of extended period of limitation - HELD THAT - It is a settled principle of law developed through several decisions of the Hon'ble Apex Court, one of which was delivered recently in the case of M/S CONTINENTAL FOUNDATION JOINT VENTURE SHOLDING, NATHPA HP VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I 2007 (8) TMI 11 - SUPREME COURT that when the facts are known to the parties, omission by one party to do what he might have done would not render it to suppression. In the instant case service tax itself is held to be not leviable. It is found that extended period is also not invocable in this proceeding since taxability of the service was not in existence in the statute book under which classification was made while confirming the demand under tour operator service . The order passed by the Commissioner of Service Tax VI, Mumbai is hereby set aside - Appeal allowed.
Issues Involved:
1. Classification of Service 2. Leviability of Service Tax 3. Double Taxation 4. Invocation of Extended Period Issue-wise Detailed Analysis: 1. Classification of Service: The primary issue in the case was the classification of the service provided by the Appellant. The Appellant argued that their service of facilitating hotel bookings through their website should be classified under "travel agent service" and not "tour operator service". The Respondent-Department, however, classified the service as "tour operator service". The Tribunal scrutinized the definitions under Section 65(115) of the Finance Act, 1994, which defines "tour operator" as a person engaged in the business of planning, scheduling, organizing, or arranging tours, which may include arrangements for accommodation. The Tribunal concluded that the Appellant's activity did not meet the criteria of "tour operator service" as it did not involve planning or operating tours in tourist vehicles. The Tribunal held that the Appellant's service should not be classified as "tour operator service" solely because it included accommodation arrangements. 2. Leviability of Service Tax: The Tribunal examined whether the service of providing hotel accommodation by the Appellant was liable for Service Tax. The Appellant contended that it was merely facilitating reservations and collecting payments on behalf of the hotels, deducting its commission, and passing the remaining amount to the hotels. The Tribunal noted that the Appellant discharged Service Tax on the commission earned but not on the total amount collected from customers. The Tribunal agreed with the Appellant that the service of hotel accommodation was not taxable during the relevant period (April 2006 to March 2011) as the levy on hotel accommodation was introduced only from 01.05.2011 under Section 65(105)(zzzzw) of the Finance Act, 1994. Therefore, the Tribunal held that the demand for Service Tax on the entire amount collected was not justified. 3. Double Taxation: The Appellant argued that the demand for Service Tax on the entire amount collected from customers, including the portion passed to the hotels, amounted to double taxation. The Tribunal observed that the Appellant had already paid Service Tax on the commission earned and that demanding tax on the entire amount would indeed result in double taxation. The Tribunal emphasized that double taxation is against the principles of equity and is not permissible under the law. 4. Invocation of Extended Period: The Appellant challenged the invocation of the extended period for raising the demand. The Tribunal noted that there were multiple communications between the Appellant and the Department, and the Appellant had cooperated by providing necessary documents and information. The Tribunal found that the Department was aware of the Appellant's activities and that there was no suppression of facts with intent to evade tax. The Tribunal also criticized the delay in the investigation and adjudication process. Citing the principle established by the Hon'ble Supreme Court in the case of Continental Foundation Joint Venture Vs. Commissioner of Central Excise, Chandigarh, the Tribunal held that the extended period could not be invoked as the facts were known to the Department, and there was no deliberate suppression by the Appellant. Conclusion: The Tribunal allowed the appeal, setting aside the order passed by the Commissioner of Service Tax, Mumbai, and granted consequential relief to the Appellant. The Tribunal's decision was based on the erroneous classification of the service, non-leviability of Service Tax on the hotel accommodation service during the relevant period, the prohibition of double taxation, and the improper invocation of the extended period for raising the demand.
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