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2019 (9) TMI 1046 - AAR - GSTClassification of service - arranging the client s accommodation in hotels - input tax credit of GST charged by the hotels - HELD THAT - The Applicant is admittedly a tour operator. But the question on which the advance ruling is sought is whether it should continue to be classified as a tour operator when it merely arranges the client s accommodation in hotels. It is not unusual for tour operators to bulk book rooms in hotels and release a few of them to clients who either do not book for the tour or prefer to reach by own arrangement and pay only for the accommodation - According to Explanation to Sl No. 23(i) of the Rate Notification, tour operator means any person engaged in the planning, scheduling, organising, and arranging tours by any mode of transport. Arranging accommodation might be provided as add-ons, but that is not the essence of the tour operating service. The Applicant s service under focus in the Application is not, therefore, to be treated as that of a tour operator. The support services covered under Sl No. 23(iii) of the Rate Notification include services classified under SAC 998552. Services covered under SAC 998552 include arranging reservations for accommodation services for domestic accommodation, accommodation abroad etc. The Applicant s supply is specifically covered and, therefore, classifiable under SAC 998552 - It is, therefore, taxable under Sl No. 23(iii) of the Rate Notification, and the Applicant is eligible to claim the input tax credit as admissible under the law. Since the Applicant s supply is specifically covered under SAC 998552, we find no need to discuss on SAC 9997.
Issues:
1. Admissibility of the Application 2. Classification of service provided by the Applicant when arranging client accommodation in hotels Admissibility of the Application: The Applicant, a tour operator seeking a ruling on the classification of services provided when arranging client accommodation in hotels, is found to have raised admissible questions under section 97(2)(a) & (d) of the GST Act. The Application is admitted as the issues raised are not pending or decided elsewhere under the GST Act, and there are no objections from the Revenue. Classification of Service Provided: The Applicant argues that the service of arranging accommodation in hotels should not be classified as tour operating service under the Explanation to Sl No. 23(i) of the Rate Notification, as it does not include transportation required for tours. The Applicant contends that the service falls under SAC 996311 and is covered by Sl No. 7 of the Rate Notification, which allows for suppliers like the Applicant who arrange accommodation in hotels. The Revenue, however, classifies the service under SAC 9985 as a tour operating service procured from another tour operator, based on the bills indicating charges inclusive of accommodation and transportation for tours. The Authority finds that the Applicant's service of arranging accommodation in hotels does not qualify as a tour operating service as per the Rate Notification. It is not classified under SAC 996311 for accommodation services provided by hotels and is instead covered under SAC 998552 for arranging reservations for accommodation services, making it taxable under Sl No. 23(iii) of the Rate Notification. The Applicant is eligible to claim input tax credit under the law for services classified under SAC 998552. In conclusion, the ruling states that if the Applicant arranges accommodation in hotels for clients only, the service is classified under SAC 998552, taxable under Sl No. 23(iii) of the Rate Notification, and allows for the Applicant to claim input tax credit as per the law. This ruling remains valid unless declared void under the provisions of the GST Act.
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