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TMI Blog2023 (10) TMI 1388X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 65(105)(n) of the Finance Act as held by the Tribunal in their own case or otherwise? (ii) Whether the appellant is said to be providing the said service within the taxable territory?" 2. Ms. Lakshmi Menon, learned counsel, has appeared for the liquidator appointed for the appellant. 3. Though it was in Cox & Kings that the two issues were referred to a larger bench of the Tribunal, but an application for intervention was filed on behalf of M/s. Travel Corporation of India in M/s. Travel Corporation of India Ltd. vs. Commissioner of Service Tax, Mumbai [Service Tax appeal No. 85792 of 2013] with a prayer that an opportunity may be granted to the applicant to make submissions as an intervener before the larger bench for the reason that the decision that would be taken would have a bearing on the appeal filed by the appellant. This application was allowed on 19.04.2023 and Shri V. Sridharan, learned senior counsel assisted by Shri Vinay Jain and Somesh Jain, made submissions on behalf of the intervenor. 4. The issue that had arisen for consideration before the Principal Bench of the Tribunal at New Delhi in Cox & Kings was whether the activity of providing service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract are printed on the reverse of the order booking form. It, inter alia, states that the air fares are not included in the cost unless otherwise specified. The details of the form are filled in the "TRIBS" software maintained by the appellant. The customer makes payment for the cost of the tour to the appellants. The appellant issues a receipt (acknowledgment) to the customer upon receipt of payment bearing the particulars of the payment and the customer booking reference number; and (c) Being an authorised air travel agent, wherever customer so desires specifically, the appellant enters into a separate arrangement for booking air tickets from the "hub" city namely, Mumbai, Delhi, Chennai to the destination city. In such case, on the specific request of the customer, the appellant books air tickets for the customer. This may not so happen in all cases. This is purely optional to the customer. However, in cases where the appellant book air tickets for the customer, the appellant recovers the cost of the air ticket from the customer separately. The appellant pays service tax under "air travel agent" service read with rule 6(7) of the Service Tax Rules, 1994 [the 1994 Rules] 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st vehicle covered by a permit granted under the provisions of the Motors Vehicles Act, 1988 or the rules made thereunder, is specified to be the defined service as well. Operating tours by any mode of transport would have clearly covered operating tours in a tourist vehicle covered by a permit granted under the 1988 Act or the rules made thereunder; and the later inclusionary clause would amount to a surplusage." (emphasis supplied) 13. The aforesaid decision of the division bench of the Tribunal in Cox & Kings, therefore, holds that where a person is engaged in a composite activity of operating tours and planning, scheduling, organizing or arranging of tours (including arrangements for accommodation, sightseeing or similar activities) by a mode of transport other than by a tourist vehicle covered by a permit issued under the provisions 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 thereunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in India. It relieves the client of the burden of booking of accommodation in hotels in foreign countries. It is received and consumed before the tour starts when the client is still in India. Consumed in India planning and booking for travelling through bus, railways, travelling cruise liners, etc., in foreign locations, Booking activity is undertaken sitting in India. It relieves the client of the burden of booking of travel arrangements in foreign countries. It is received and consumed before the tour starts when the client is still in India. Consumed in India The sightseeing is booked with local guides abroad or appellants own guides on tours, In case of local guides abroad the services provided is only of booking guides In case the appellants provide own guides the actual service of guide is provided abroad The activity of booking a local guide abroad is provided in and consumed in India. The activity of guide is provided and consumed abroad The breakfast/meals are booked by the appellant with the restaurants/ Hotels. The service provided can be of just booking of meals or actually providing meals. In case the activity is of booking meals with Hotels/ restaurants, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed at the client enjoying the tour outside India and, therefore, though they may be covered under the definition of a "tour operator", they were not taxable as per the Trade Notice dated 27.04.2000 issued by the Pune Commissionerate. It was also contended that the service tax is a destination based consumption tax which is levied where the services are consumed and thus, even if the services are rendered in India, they are consumed outside India and have to be considered as export of service. 17. The adjudicating authority observed that the submission of the appellant that service tax is a destination based consumption tax would not be relevant since both the service tax provider of "outbound tour" and the recipient tourist were located in India and only the execution was to be outside India. The adjudicating authority also observed that in view of the amended definition of "tour operator", planning, scheduling, organizing and arranging of tour was of essence and, therefore, it would not matter even if the execution of the tour was outside India. It is for this reason that the adjudicating authority held that the Circular issued by the Board that no service tax would be payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Finance Act is as follows: "65. (41) "taxable service" means any service provided ... (q) to any person, by a tour operator in relation to a tour" 22. The term "tour" was defined under section 65(43) as under: "(43) "tour" means a journey from one place to another irrespective of the distance between such places" 23. The text of the above provisions have not undergone any change whatsoever, whether prior to 10.9.2004 or post 10.9.2004, except for renumbering of the clause. 24. The definition of "tour operator" has undergone various changes during different periods, which are as under: "(i) 1-9-1997 to 6-10-1998: (44) "Tour Operator" means a person who holds a tourist permit granted under the rules made under the Motor Vehicles Act, 1988; (ii) 7-10-1998 to 9-9-2004: (44) "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 or the rules made thereunder; (iii) 10-9-2004 to 15-5-2008: (115) "Tour Operator" means any person engaged in the business of planning, scheduling, organising or arranging tours (which may include arrangements for accommodatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urist 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 thereunder (amendments are emphasised). 26. Clause (q) was inter alia inserted in section 67 of the Finance Act and it is follows: "67. Valuation of taxable services for charging service tax,- For the purposes of this Chapter, the value of taxable services, - ..... (q) in relation to services provided by a tour operator to a client, shall be the gross amount charged by such operator from the client for services in relation to a tour and includes the charges for any accommodation, food or any other facilities provided in relation to such tour." 27. Thus, the above valuation section provides that the value of tour operator service will not only include the gross amount charged for the tour but also the charges for accommodation, food or any other facilities provided in relation to such tour. This section elucidates that the services in relation to tour are accommodation, food or any other facilities which may be sight-seeing and medical facilities. 28. It would be appropriate to again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition is not narrowed down by the "includes" part. This is what was observed by the Supreme Court in Hamdard (Wakf) Laboratories vs. Dy. Labour Commissioner and Others [(2007) 5 Supreme Court Cases 281] and the observations are: "33. When an interpretation clause uses the word "includes", it is prima facie extensive. When it uses the word "mean and include", it will afford an exhaustive explanation to the meaning which for the purposes of the Act must invariably be attached to the word or expression. (See G.P. Singh's Principles of Statutory Interpretation, 10th Edn., pp. 173 and 175.)" 33. It is in the light of the aforesaid, that the definition of a "tour operator" has to be examined. 34. As noted above, the first part of the definition of a "tour operator" defines it to mean any person engaged in the business of planning, scheduling, organizing or arranging tours by any mode of transport. This would be an exhaustive definition of a "tour operator". However, the definition also 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 Motor Vehicles Act or the Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the provisions of article 245(2) of the Constitution, but the Parliament has chosen not to levy tax on services provided outside India. In this connection, learned senior counsel also placed reliance upon the provisions of section 66 of the Finance Act and submitted that service tax would be leviable only if the service is provided in India and in this connection placed reliance upon the Circular No. 36/4/2001 dated 18.10.2001 and the Circular F.No. B. 43/10/97-TRU dated 22.08.1997. Learned senior counsel also placed reliance upon the Export of Services Rules 2005 and Taxation of Services (provided from outside India and received in India) Rules 2006. According to the learned senior counsel, the actual provision of service of tour i.e. the journey from one place to another takes place outside India and "the service in relation to tour (food, accommodation and other facilities) is also provided outside India. Thus, the situs of tour operator service, in case of outbound tour, is outside India. 39. The Board Circular dated 22.08.1997, on which reliance has been placed by the learned senior counsel, was issued in connection with imposition of service tax on a "tour operator". Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. 2.5 The service tax on services rendered by tour operators in relation to a tour shall be the gross amount charged by such operator from the client and shall include the charges for other services provided such as accommodation, food and other facilities in relation to such tour. In other words, it will be on the gross amount charged to the customer. However, in cases where the tour operator provides a package tour i.e. which necessarily includes accommodation for stay and may also include other facilities such as food, guide services etc., an abatement of 60% of the total amount charged may be given for the purposes of the service tax provided that the bill issued for this purpose clearly indicates that it is inclusive of such charges. In other words, service tax would be leviable on 40% of the total amount charged in cases where the tour operator provides a package tour and the price of which mandatorily includes charges for accommodation for stay provided during the course of the tour (Notification No. 39/97-S.T. refers). Further an abatement of 90% from the gross amount charged to the client has been provided where the tour operator provides the services solely of booking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ten per cent of the gross amount charged from any person by such operator for the services provided in relation to a tour, if the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour and the bill issued for this purpose indicates that it is towards charges for such accommodation: Provided that no exemption from the taxable service provided by the tour operator shall be available in case the bill issued to the client only includes the service charges for arranging or booking accommodation for any person in relation to a tour and does not include the cost of such accommodation. 2. This notification shall come into force on the 1st day of September, 1997." 41. The Circular has to be read in the light of the definition of "tour operator" prevailing at that point of time. Thus, only arranged tours using a tourist vehicle covered by permit granted under Motor Vehicles Act were brought under the ambit of service tax. However the definition of "tour operator service" underwent a change w.e.f. 10.09.2004. The amended definition introduced the services such as planning, scheduling, organising or arranging tours, arrang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s undertaken within India. However, the definition in section 65(105) of Finance Act is not limited to the physical aspect but also the precursor preparation which is taxable on its own standing within the scope permitted by section 65(105)(n) of Finance Act. Such evaluation of extent of taxability cannot be decided upon without reference to the factual aspects of the activity sought to be brought within the tax net by service tax authorities. 47. The earlier decision in Cox & Kings had not determined its decision on the given set of facts but on restricted interpretation of the definition of "tour operator" as prevailing then. The stated interpretation of the definition is not consistent with the revision in the definition. Hence, the division bench assigned to dispose off this appeal will have to decide the outcome without placing reliance on the interpretation of the Principal Bench relied upon by the appellant. All the issues in the appeal as well as the order impugned therein will have to be decided on merits. 48. The referral bench at Mumbai also sought opinion of larger bench on the provision of service by appellant within the taxable territory. As seen from the facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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