9911796707
TMI Blog2012 (5) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... o the extent of 60% on the gross taxable value (including all the said charges) under Notification No. 39/1997-ST up to 28/02/2006 and under Notification No. 1/2006 from 01/03/2006 to 22.8.2007. They can claim 75% abatement under the latter Notification (as amended) from 23.8.2007. Cenvat credit - nexus between output and input service - held that:- the credit In question cannot be allowed to the appellant inasmuch as, in this appeal, they have not brought out any nexus between the so-called input services (architect services and technical services) and the tour operator's service. Their claim that they are eligible for the credit under the CENVAT Credit Rules 2004 remains Ipse dixit as they have not shown that the said services fell within the ambit of the definition of 'input service' under rule 2(1) of the CENVAT Credit Rules 2004. - Decided against the assessee. Extended period of limitation - held that:- The definition of 'tour operator' came to be amended twice during the material period and Notification No. 39/97-ST was superseded by Notification No.1/06-ST and the latter was amended by Notification No.38/07-ST, all these during the material period. It appears, these changes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur operator' given under Section 65(44) of the Finance Act 1994, the adjudicating authority allowed the above abatement from the net amount (gross amount collected by the assessee from their customers minus the sum of train/TTD/RFC amounts) and, accordingly, quantified the amount of service tax to be paid by the assessee, which came to be Rs. 48,41,400/- as shown below: Gross amount: Rs. 26,64,72,000/- Train fare Rs. 55,62,102/- Darshan Tickets Rs. 1,33,63,699/- Entry Fee (RFC) Rs. 34,76,461/- Total Rs. 2,24,02,262/- Net Rs. 24,40,70,000/- Abatement @60% Rs. 14,64,42,000/- Taxable value Rs. 9,76,28,000/- Service Tax @5% Rs. 48,41,400/- The adjudicating authority also ordered for appropriation of the above service tax amount with interest thereon from an amount of Rs. 62.7 lakhs paid as service tax by the assessee during the period from 4.3.2004 to 15.3.2005. However, the benefit of Section 80 of the Finance Act, 1994 was given to the assessee and hence no penalty was imposed on them vide order-in-original No. 15/05 dated 5.8.2005. [Aggrieved by the demand of interest on tax, the assessee applied for "rectification of mistake" of this order-in-orlginal, which appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation under the proviso to Section 73(1) of the Act, the show-cause notice alleged that the factum of having collected taxable amounts was suppressed by the assessee in their ST-3 returns. All the allegations were denied by the assessee and the demand of service tax and other proposals in the show-cause notice were contested by them. In adjudication of the dispute, the learned Commissioner confirmed the aforesaid demands of service tax against the assessee under Section 73(2) of the Finance Act, 1994 and ordered payment of interest thereon under Section 75 of the Act. Penalty at the rate of 2% per month on the amounts of service tax demanded was imposed under Section 76 of the Act and penalty of Rs. 1,11,10,000/- was imposed under Section 78 of the Act vide order-in-original No. 26/08-ST dated 28.11.2008 read with corrigendum dated 26.12.2008. The present appeal is directed against the Commissioner's decision. Appeal No. ST 424/2009: In a show-cause notice dated 21.10.2008 Issued to the assessee, the Commissioner demanded service tax of Rs. 61,09,552/- for the period from April 2007 to March 2008 alleging short-payment of tax by not including train fare, darshan ticket charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. Appeal No ST/954/2011: Show-cause notice dated 4.6.2008 demanded from the assessee service tax of Rs. 4,82,768/- which was allegedly short-paid on tour operator's service for the month of April 2007. This notice alleged that the appellant short-paid service tax to the extent of Rs 4,82,768/- in April 2007 on the ground of excess payment of service tax in 2006-2007. This notice invoked the proviso to Section 73(1) of the Finance Act, 1994 for recovery of the said amount of tax. Interest on tax was demanded under Section 75 of the Act and a penalty was proposed under Section 76 of the Act. The demands/proposals were contested by the assessee. The adjudicating authority confirmed the demand of service tax against them and also ordered recovery of interest. It also imposed penalty on the assessee at the rate of 2% per month under Section 76 of the Act. An appeal filed by the assessee against the order-in-original was disposed of by the Commissioner (Appeals) by sustaining the demand of service tax but vacating the penalty. The present appeal of the assessee is against the appellate Commissioner's order. 2. The appellant-company is registered with the department as a ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 008, 'tour operator' stood defined thus: "tour operator" means any person engaged in the business of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988 (59 of 1988) or the rules made there under;" With effect from 16.5.2008, the definition reads as follows: "tour operator" means any person engaged in the business of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours in a tourist vehicle or a contract carriage by whatever name called, covered by a permit, other than a stage carriage permit, granted under the Motor Vehicles Act, 1988 (59 of 1988) or the rules made there under. Explanation - For the purposes of this clause, the expression "tour" does not include a journey organized or arranged for use by an educational body, other than a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h his eyes and enjoys nature at the same place and spends time at the same place." On the above basis, it was contended that the TTD darshan ticket charges, RFC entry fees, hill transportation charges and waterfleet charges were not to be included in the taxable value of tour operator's service. Further, relying on the Tribunal's decision in the cases of Scott Wilson Kirkpatrlck (I) Pvt Ltd. v. CST [2007(5)STR 118(T-Bang.)] and Rolex Logistics Pvt Ltd. v. CST [2009(13)STR 147(T-Bang.)], the learned counsel submitted that the TTD darshan charges, RFC entry fees, train fare etc., having been paid by the appellant and reimbursed by their customers, were to be regarded as expenditure incurred on behalf of clients by the service-provider and not as expenditure for the tour operator's service provided by the appellant. It was also pointed out that the Revenue's appeal against the Tribunal's decision in the case of Scott Wilson Kirkpatrick (I) Pvt. Ltd. was dismissed by the appellate Court. The learned counsel further contended that, as the above charges/fees were not includible in the value of taxable service, the appellant was entitled to claim abatement under the relevant Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal notices was untenable. In this connection, reliance was placed on the following decisions of the Supreme Court: a. Nizam Sugar Factory v. CCE [2006(197) ELT 465(SC)] b. Hyderabad Polymers (P) Ltd. v. CCE [2004(166) ELT 151 (SC)] c. P&B Pharmaceuticals (P) Ltd. v. CCE [2003(153) ELT 14 (SC)] d. Geotech Foundation & Construction v. CCE [2008(224) ELT 177 (SC)] e. ECE Industries Ltd v. CCE [2004(164)ELT 236(SC)] The learned counsel further pointed out that the appellant was a Government Undertaking and held the bona fide belief that they paid the tax due and did not have any intent to evade payment of service tax. The dispute between them and the department was in relation to interpretation of statutory provisions. There were frequent changes in the definition of 'tour operator' and notifications were issued by the Government from time to time granting abatements and exemptions. In such circumstances, confusion prevailed in the matter of interpreting the provisions related to tour operator's service. For these reasons also, the proviso to Section 73(1) of the Finance Act 1994 was not invocable against the appellant. In this context, the following decisions were cited: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of the outcome of appeal No. ST/138/2009. On the point of limitation, he reiterated the findings recorded in the relevant impugned orders. 7. The essential particulars of appeals are given below: Sl. No. Appeal No. Period of dispute Date of show-cause notice Main issue 1. ST/387/07 1-4-2000 to 31-3-2003 12-6-2006 Whether train fare, TTD darshan ticket charges and RFC entry fee to be included in the taxable value of the service for grant of abatement under Notification No. 39/97-ST 2. ST/138/09 2003-04 to 2006-07 11-1-2008 (a) Whether TTD darshan ticket charges, RFC entry fee, hill transport charges and water fleet charges to be included in the taxable value for the purpose of grant of abatement under Notification No.39/97 ST and Notification No.l/06-ST; (b) Whether any service tax short-paid on mandap-keeper service; (c) Whether inadmissible CENVAT credit availed and utilized. 3. ST/424/09 April 2007 to March 2008 21-10-2008 Whether TTD darshan ticket charges, RFC entry fee, hill transport charges and water fleet charges to be included in the taxable value for the purpose of grant of abatement under Notification No. 39/97-ST and Notification No. 1/06/-ST. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a day's travel, but in use it has attained a broader though less definite meaning, and it is now applied to a travel by land from place to place without restriction of time. The learned counsel has also adverted to the meaning of the word 'travel' given in WORDS AND PHRASES (Permanent Edition), Volume 42A. This book says thus: "travel means to go from one place to another at a distance; to journey". Relying on these books, the learned counsel has argued that going round for sight-seeing, cruising in boat in a body of water, visiting a temple for darshan of the deity or visiting a hill station in or around the same place cannot be considered to be journey or travel from one place to another and hence such events are not part of a 'tour' defined under section 65 of the Finance Act, 1994. Therefore, according to the learned counsel, the moneys collected by the appellant from tourists in relation to local events like temple darshan, visit to film city, boat cruising, etc. cannot be part of the taxable value of tour operator's service. Per contra, it has been argued by the learned JCDR that, as the distance between the starting point and the destination of the traveller is immaterial to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplementary services provided by the tour operator are also encompassed by the definition of the taxable service under section 65(l05)(n) of the Finance Act, 1994, which reads: "taxable service means any service provided or to be provided to any person by a tour operator in relation to a tour". Therefore the pedantic arguments based solely on the meaning of 'journey' cannot be countenanced. 11. In the case of Touraids (I) Travel Services (supra), this Tribunal considered supplementary services like arranging guide service, porter service, food service, monument visit, etc. and held that these were covered by the expression 'any service provided by tour operators in relation to a tour'. The Tribunal observed that the phrase 'in relation to a tour' was wide enough to cover such supplementary services also. The Tribunal also noted that supplementary services like arrangement of accommodation, sight-seeing and similar services were covered by the definition of 'tour operator' from 10-9-2004. CBEC's Circulars dated 22-8-1997 and 9-7-2001 were accepted as contemporanea expositio of tour operator's service and accordingly it was held that the supplementary services of arranging guide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng tours in a tourist vehicle covered by permit granted under Motor Vehicles Act, 1988 or rules made thereunder". In view of the above definition of "tour operator" during period from 1-4-02 to 9-9-04 it has been pleaded by the Appellant that during this period the supplementary services like arranging guide services, monument visit services, porter services, food services, general assistance services etc. did not come within the purview of the activities of "tour operator's" service and hence did not attract any service tax. We do not agree with this argument. Throughout the period of dispute the taxable service in relation to tour operator is defined under Section 65(105) as under:- "Taxable service means any service provided to any person, by a tour operator in relation to a tour". The word 'tour' throughout the period of dispute, has been defined as journey from one place to another irrespective of the distance between such places. The words "in relation to a tour" in the definition of taxable service are very vide and would cover, in addition to journey from one Place to another, the allied services in relation to such tours like providing refreshment during the journey arra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services of arranging guide services, monument visit services, porter services, food services, general assistance services etc. were covered by the definition of "tour operator service" and hence the same attracted service tax. It is not material as to whether the Appellants charged the PTOs for these services on actual basis or otherwise" [underlining supplied] 12. Notification No.39/97-ST dt. 22/08/1997 which carne into force on 01/09/1997 reads as under:- In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable service provided by a tour operator from so much of the service tax leviable on such operator, as is in excess of the amount of service tax calculated on forty per cent of the gross amount charged from any person by such operator for the services provided in relation to a tour, where the tour operator provides a package tour to any person and the bill issued for this purpose indicates that it is inclusive of charges for such a tour. 2. This notification shall come into force on the 1st day of September, 1997. Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed but they are only towards other expenditure incurred on behalf of the client by the service provider. Normally, the service provider incurs these expenditures in the interest of quicker service. Suppose the service provider has to first receive the money and then render the service, it would cause lot of delay. Therefore, while providing service to the client, the service provider has to incur various expenditure in order to save time and avoid delay, hence, the expenditure is incurred by the service provider and later these are reimbursed by the client. In fact, the client is supposed to pay all these amounts. For example, take the case of a Custom House Agent in the course of clearance of the goods, the importer may have to incur different expenditures towards the port, stevedoring clearances, stationery, all that These expenditures are actually to be paid by the importer but the CHA initially incurs all these expenditure and then later collects from the client These are reimbursements. So what is to be borne in mind is that these reimbursements are not for the services rendered. The gross receipt for the services rendered means only for the services rendered……. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' prior to 23/08/2007. On the one hand, the above argument of the appellant is a tacit acknowledgment of the fact that the supplementary services viz. TTD darshan, RFC visit, boat cruise etc. can appropriately be brought within the scope of "other similar services". On the other hand, It is founded on the unacceptable premise that the provisions of an exemption Notification could be used as a means to construe the provisions of a statute. As we have already indicated, what should be the components of taxable value of package tour operator's service will be governed the definitions of tour, tour operator and tour operator's service under Section 65 coupled with the provisions of Section 67 of the Finance Act, 1994. Apparently, the meaning of 'package tour' as understood in common parlance was recognized in the Board's Circulars noted by the Tribunal in Touraids case, and the same concept came to be incorporated (through the clause in parenthesis, reading: "which may include arrangements for accommodation, sightseeing or other similar services") in the definition of 'tour operator'. More significantly, the definition of the taxable service under Section 65(105)(n) of the Act has, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt viz. Gujarat State Fertilizer Co. v. CCE [1997(91)ELT 3 (SC)]; SACI Allied Products Ltd v. CCE [2005 (183)ELT 225 (SC)] etc. The appellant, however, has not set up any challenge against the Commissioner's finding that they did not satisfy the conditions for adjustment of tax under sub-rules (4A) and (4B) of Rule 6. Para 14 of the show-cause notice indicates that, against the relevant audit objection, the assessee's contention was that there was no short-payment of tax on mandap keeper's service as excess payment of tax made on tour operator's service during the same period had been adjusted. The show-cause notice alleged that such adjustment was not permissible as the assessee had not correctly arrived at the taxable value for the purpose of payment of tax in respect of tour operator's service. The show-cause notice did not allege that the adjustment was not acceptable for want of compliance with the conditions laid down under Rule 6(4B). Thus, it appears that the reason stated by the adjudicating authority for not allowing adjustment is beyond the scope of the show-cause notice. In terms of the show-cause notice, the learned Commissioner ought to have determined whether there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is claimed that the denial of the benefit is contrary to the provisions of the CENVAT Credit Rules 2004. We have considered these submissions also. As rightly submitted by the appellant, the CENVAT credit in question was proposed, in the show-cause notice, to be denied to the assessee on the ground that there was no nexus between the input services and the output service and not on the ground that the invoices/bills Issued by the Input service providers did not contain the necessary particulars required under Rule 9 of the Central Excise Rules. We find that the learned Commissioner denied the credit mainly for want of nexus with output service. Though it can be said that he travelled beyond the scope of the show-cause notice by citing the defects of invoices/bills as a reason for disallowing CENVAT credit, nevertheless, for this reason alone, the credit In question cannot be allowed to the appellant inasmuch as, in this appeal, they have not brought out any nexus between the so-called input services (architect services and technical services) and the tour operator's service. Their claim that they are eligible for the credit under the CENVAT Credit Rules 2004 remains Ipse dixit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has supplemented judgments in a bid to establish that the extended period of limitation was not invocable as they being a Government company did not have any intent to evade tax and as any short-payment of service tax was attributable to the confusion which prevailed in the matter of Interpretation of the provisions related to tour operator's service. The learned counsel for the appellant has also submitted that there was confusion regarding the scope of the definition of 'tour operator' as indicated by the amendments made to this definition from time to time. He has also referred to the Notifications issued by the Government granting abatements and exemptions. He has particularly referred to the Notification issued under section 11C of the Central Excise Act read with Section 83 of the Finance Act, 1994. In this view, these legislative measures amply reflected the uncertainty or lack of clarity in the stand of the Revenue regarding the taxability of tour operator's service. According to the learned counsel, in such circumstances, the extended period of limitation should not be Invoked In this case. A part of the demand challenged in appeal No.ST/424/2009 is also said to be beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation is not invocable in a show-cause notice on the ground of wilful suppression or misstatement of facts where the Department raised a similar demand of duty in an earlier show-cause notice issued to the assessee on the same grounds. In the cases of Padmini Products (supra), SNS (Minerals) Ltd. (supra), Centre for Development in Advanced Computing (supra) etc., the apex court held to the effect that if the assessee bona fide believed in a legal position in which they did not have liability to pay duty, the extended period of limitation was not invocable for recovery of such duty. In the instant case, the appellant, a Government Undertaking, held the bona fide belief that they paid the tax due and did not have any intention to evade payment of service tax. The dispute between the appellant and the Department apparently arose out of conflicting Interpretations of the Notifications and statutory provisions relating to tour operator's service. The definition of 'tour operator' came to be amended twice during the material period and Notification No. 39/97-ST was superseded by Notification No.1/06-ST and the latter was amended by Notification No.38/07-ST, all these during the materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax demanded by the lower authorities inasmuch as they have demonstrated the belief to be bona fide. Therefore, the appellant can legitimately claim the benefit of Section 80 of the Act. Both the penalties are liable to be set aside on this ground. 24. We have already recorded reasons, in Appeal No. ST/138/2009, for requantification of the amount of tax recoverable from the assessee. Only upon such requantification can it be ascertained whether any excess payment of tax over and above what was due to the Revenue was paid by the assessee in 2006-07. According to the appellant, they made excess payment of Rs. 4,82,768/- as service tax on tour operator's service in 2006-07 and this amount can be appropriated towards the demand of service tax for the month of April 2007 challenged in Appeal No. ST/954/2011. The demand of service tax of Rs. 4,82,768/- has been confirmed against the assessee for the month of April 2007 on the ground that there was no excess payment of tax in the previous financial year. Thus, it is clear that the question whether any amount of tax is recoverable from the assessee in respect of tour operator's service for the month of April 2007 can be settled o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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