9911796707
TMI Blog2023 (10) TMI 1388X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Motor Vehicles Act or the Rules made thereunder, such activity would fall outside the scope of the definition of a tour operator. However, the activity of planning, scheduling, organizing or arranging tours including operating the tour in a tourist vehicle covered by a permit granted under the Motor Vehicles Act or the Rules made thereunder would fall within the ambit of tour operator. Whether the service that the appellant is providing is a taxable service under section 65(105)(n) of the Finance Act? - HELD THAT:- The division bench in Cox Kings examined whether the activity of providing services in relation to outbound tours during the period from 10.09.2004 to 30.09.2008 would fall within the ambit of a service provided by a tour operator and consequently subjected to levy of service tax. The division bench observed that the definition of tour operator has two facets. The business of planning, scheduling, organizing or arranging tours by any mode of transport including where the tour is by a tourist vehicle covered by a permit under Motor Vehicles Act is one facet of the definition, while operating of tours in a tourist vehicle covered by a permit granted under Motor V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on without reference to the factual aspects of the activity sought to be brought within the tax net by service tax authorities. Thus, the taxability of activity undertaken by the appellant will have to be decided on the facts peculiar to the case and in accordance with intent of section 65, section 66 and section 67 of the Finance Act - The dispute in this appeal, i.e., from 01.04.2005 to 31.03.2011, pertaining to the period prior to the negative list regime does not have to consider taxable territory as affecting the decision thereon. The papers may be placed before the division bench to decide the appeal on merits. - Hon ble Mr. Justice Dilip Gupta, President, Hon ble Mr. C.J. Mathew, Member (Technical) And Hon ble Mr. P.A. Augustian, Member (Judicial) For the Appellant : Ms. Lakshmi Menon, Advocate. For the Department : Shri V. Sridharan, Senior Advocate for the Intervenor assisted by Shri Vinay Jain and Somesh Jain Shri Shambhoo Nath, Authorized Representative. ORDER JUSTICE DILIP GUPTA : A division bench of the Tribunal at Mumbai, while hearing this appeal, expressed doubts on the earlier decision rendered by a division bench of the Principal Bench of the Tribunal at New Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India but for foreign tourists. The said inbound tour package would commence, be wholly performed and terminate in India. 9. In case of outbound tours category, the tours are outside India for Indian residents. The tour in such case starts from the place of arrival outside India and is complete at the place of destination outside India. 10. The appellant claims that it has been paying service tax under the taxable category tour operator in respect of domestic tour and inbound tour but the appellant has not discharged service tax on outbound tours either before 10.09.2004 or after 10.09.2004. 11. According to the appellant, the procedure for booking of outbound tour is as follows: (a) The appellant publishes advertisements in leading newspapers for advertising package tours. The appellant has pre-printed brochures/booklets for the package tours which contain details of tours for visit to a particular country or region. The customer approaches the front desk at the office of the appellant for enquiry of the tour packages. The said travel executive would show the said pre-printed brochures/booklets to the customer; (b) After deliberations, if the customer opts for any tour, the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of operating tours in a tourist vehicle covered by a permit. In the opinion of the bench: On a true and fair construction of the amended definition, the amendment expands the scope of the expression to include in the taxable service, engagement in the business of planning, scheduling, organising or arranging tours (which may include arrangements for accommodation, sightseeing or similar services) by any mode of transport (not limited to tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988 or the rules made thereunder). The generic facet of the definition does not however include the business of operating tours, by any mode (i.e. all modes), of transport. Contours of the expression (in the generic facet) are clearly limited to the business of planning, scheduling, organising or arranging, etc., but exclude operation of tours. We infer this to be the only permissible meaning of the amended definition, since if the generic facet of the definition includes operating tours as well, there was no necessity for the second and specific facet spelt out in the definition, namely operating tours in a tourist vehicle covered by a permit granted under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mself. He could have done the airline and hotel bookings. He could have booked the meals and tour guide online. He could have booked the local travel abroad himself. He could have arranged sightseeing himself. However the client chooses to offload these activities to the appellant. These activity could have been done by the client himself but the same is offloaded to the appellant due to appellants expertise in the activity of planning scheduling etc. The actual tour is undertaken by the client himself and not by the appellant on behalf of the clients. The activity of planning, scheduling, organizing or arranging is complete before the client leaves the shores of India. Thus provision of services of services of planning, scheduling, organizing or arranging tours is done by the appellant in India, before the client leaves the shores of India. Following is the analysis of the services provided by the appellant. Service received by client Where provided Where consumed Determination of the probable dates and venues of tours, finalising the itinerary; The entire scheduling and finalising of itinerary is conducted by the appellants in India It relieves the client of determining the right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f planning, scheduling, organizing or arranging is provided and consumed within India much before the client leaves the shores of India and is not done outside the territory of India. (emphasis supplied) 15. The dispute in the present appeal covered by the two show cause notices is from 01.04.2005 to 31.03.2011 in connection with outbound tours which are tours conducted out of India. According to the department, planning, scheduling, organizing or arranging tours by any person is covered under the definition of a tour operator , which activity is done in India though the actual execution of such planning, scheduling, organizing or arranging of tours may be performed outside India. Thus, the department believed that with effect from 10.09.2004, the services relating to outbound tours provided by the appellant would be covered under the category of tour operator services under section 65(115) of the Finance Act and chargeable to service tax as the said services are provided by a tour operator located in India to a recipient also located in India. It was also felt by the department that as both the service provider and the service receiver are located in India, the services would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under Motor Vehicles Act including planning, scheduling, organizing or arranging of such tours is another facet. Thus, where a person pursues a composite activity of operating tours and planning, scheduling, organizing or arranging of such tours by a mode of transport other than a tourist vehicle covered by a permit under the Motor Vehicles Act, then such activity would fall outside the scope of the definition of tour operator . What persuaded the division bench to come to such a conclusion was the fact that the first facet was limited to the business of planning, scheduling, organizing or arranging of tours and excluded the operation of tour because if the first facet also included operating of tours, there was no necessity for the second and specific facet to include the operation of the tour in a tourist vehicle covered by a permit granted under the Motor Vehicles Act. The operating of a tour by any mode of transport would have clearly covered operating tour in a tourist vehicle covered by a permit granted under the Motor Vehicles Act and so the inclusionary clause would be rendered surplusage. 20. Tour operator service was brought within the ambit of service tax w.e.f. 1.9.19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any subject or field (amendments are emphasised). 25. The position, therefore, that emerges regarding the amendments made in the definition of tour operator from time to time is as follows: 01.09.1997 TO 15.10.1998 16.10.1998 TO 09.09.2004 10.09.2004 TO 15.05.2008 16.05.2008 TO 30.06.2012 Tour operator means a person who holds a tourist permit granted under the rules made under the Motor Vehicles Act, 1988. Tour operator means 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 thereunder. Tour operator mean 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 thereunder. Tour operator mean any person engaged in the business of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finition, tour operator has been defined to mean any person engaged in the business of planning, scheduling, organizing or arranging tours by any mode of transport. This, of course, includes arrangements for accommodation, sightseeing or other similar activities. 31. The second part of the definition is exact reproduction of the definition of a tour operator from 16.10.1998 to 09.09.2004. It provides that a tour operator would include any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the provisions of the Motor Vehicles Act or the Rules made thereunder. 32. The definition of a tour operator uses both the words means and includes . Justice G.P. Singh in Principles of Statutory Interpretation (13th Edition) has stated that when a word is defined to mean such and such, the definition is prima facie restrictive and exhaustive, but where the word defined is declared to include such and such, the definition is prima facie extensive. It has also been observed that the natural meaning of the means part of the definition is not narrowed down by the includes part. The definition may also be in form of means and includes , where again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It only deals with the planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport. 36. It is, therefore, not possible to hold that what is contained in the inclusive clause of the definition is necessarily not contained in the first part of the definition as was held by the division bench in the earlier decision in Cox King. 37. The contention of the department is that the appellant is liable to pay service tax even on outbound tours but only from 10.9.2004 and not prior to 10.9.2004. The basis of the contention is that the service provider and the service recipient are in India and further the activity of planning, scheduling, organizing, arranging is also done in India. 38. The contention of the appellant, however, is that all the functions like planning, scheduling, organizing or arranging tours undertaken by the appellant are aimed at the client enjoying the tour outside India and, therefore, as the services are consumed outside India, service tax would not be leviable. According to the appellant, though the Parliament is constitutionally empowered to levy service tax eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny motor vehicle. Service tax will chargeable on all domestic and inbound tourist services provided by a tour operator holding a tourist permit. Service tax will also be chargeable on journeys/tours undertaken by tourist taxis and tourist buses (which also hold tourist permits) within and outside the State where they have been registered as tourist vehicles. ***** 2.4 The services rendered by the tour operator may be only for providing transport service within or outside, the town, city or State s territorial limits. The services rendered by the tour operators may only be limited to providing transport service in relation to a tour or it may also include host of other services as in case of a package tour. The services provided by such a tour operator may also include, apart from providing the basic services of transportation from one place to another, services of providing boarding and lodging arrangements, local sightseeing and guide services and a wide range of other value added services provided by the tour operators such as providing for porters, booking or arranging accommodation, reservation for entertainment/ amusement parks, theatres and museums, providing health and baby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to do, hereby exempts the 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 - For the purposes of this notification, the expression package tour means a tour in which the provision for transportation and accommodation for stay of the person undertaking the tour has been afforded by the tour operator. Notification No. 40/97-ST dated 22-8-1997 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 the 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 ten pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e activity is not limited to planning, scheduling, organising or arranging tours but involves utilisation of means of transport. 44. From the analysis and reasons elaborated above, it can safely be deduced that the decision of the Principal Bench in Cox Kings, based on validation of the Circular of 1997 as not being impacted by the several changes in the definition of tour operator , may not be applicable in case of outbound tours over the period of time that the activity had been taxable. 45. Several aspects of the relevant definitions and even the evolution of the extent of coverage of the levy intended by section 65(105)(n) of the Finance Act must inform the resolution of any dispute over taxability of consideration received by an Indian entity for rendering service in relation to outbound tours commencing in India. The intent of Finance Act is to tax specified activity that, undeniably, takes place in India and to exclude tax on any activity that, undeniably, does not occur in India. The definition of taxable service must fit within that framework for it to be applicable. 46. There can, thus, be no two opinions about taxability of tours undertaken within India. However, the def ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
