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TMI Blog2024 (5) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... tment is opined to have failed to point out any activity undertaken by an Air Travel Agent that promotes the business of the CRS companies - the demand of service tax on the amount of incentives received by appellant from GIPL/ITQPL under Business Auxiliary Service has wrongly been confirmed. The same is hereby set aside. Service Tax with respect to Tour Operator s Service - HELD THAT:- In view of the statutory definition of tour , considered in the context of the legal position demarcating the limits of the application and reach of provisions of the Act, it is clear that a journey from one place to another beyond the territorial limits of India, even if amounting to an activity comprised within the ambit of the definition of tour operator , would not amount to a taxable service under the provisions of the Act. On the aforesaid analysis we conclude that the consideration received for operating and arranging outbound tours, even if falling within the scope of the amended definition of tour operator ; (provided by the assessees and consumed by their tourist customers beyond Indian territory), is not liable to levy and collection of Service Tax, under provisions of the Act - This issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neously avoid outflow of Indian currency i.e. the purpose is to augment foreign exchange earnings. There are no evidence on record which may show that the appellant was dealing with sale and purchase of foreign exchange directly except that the foreign exchange dealer from whom the passenger purchases the foreign exchange adds a profit on the foreign currency sale rate and reimburses the same to the appellant - That entry 'Banking and other Financial Services under the amended Finance Act, 2008 in no way covers the said transaction of the appellant. The only entry could be under (a) (iv), (vii) or under (b) of Section 66(12) of the Act. However, the appellant states that they are not having any license for brokerage in foreign exchange and they are not carrying out any such activity. Therefore, neither under (a) (iv) or under (a) (ix) or under (b), there is a case for bringing the impugned transaction under the category of Banking and other Financial Services. The demand is therefore liable to be set aside. Invocation of extended period for issuing show cause notice - HELD THAT:- The activities as that of using CRS of GPIL/ITQPL etc. was under consideration and at the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment observed that the appellant is issuing air tickets of various airlines (domestic as well as international by booking segments (air tickets) on Computerized Reservation System (CRS) of M/s. GIPL/ITQPL) and are paying service tax on the amount of basic fare under the service category Air Travel Agent s Services . Appellant were also receiving incentive from GIPL/ITQPL. The department observed that appellant was not paying service tax on the following: (i) On domestic tours and outbound tours; (ii) On the commission received from overseas hotels for providing customers to them. The said commission was received by the appellant in the foreign exchange and they have not repatriated the said amount. (iii) On the commission received from the customers for selling Eurail passes to them as was being received from other Indian tour operators. 2. Based thereupon the department formed the following opinions: (i) The appellant has promoted and marketed the product/services of GIPL/ITQPL. The incentive received by them from the said company for using their CRS are the consideration towards the taxable service under the category of Business Auxiliary Service. (ii) Since the appellant has ack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e penalties were also proposed to be imposed upon the appellant. The said proposal has been confirmed vide Order-in-Original No. 47/2010 dated 26.08.2010 except that a demand of Rs.11,180/- was dropped. The appeal against the said order has been rejected vide Order-inService Appeal No. 200/2012 dated 06.09.2012. Being aggrieved, the appellant is before this Tribunal. 4. We have heard Shri Prabhat Kumar and Shri Karan Kanwal, learned Advocates for the appellant and Ms. Jaya Kumari, Authorized Representative for the department. 5. Learned counsel for the appellant has mentioned that the demand for the activity of using Galileo CRS system under the category of Business Auxiliary Service is completely wrong and illegal. The appellant is not the agent of GIPL and in noway is engaged in marketing and in promotion of their services in India. It is mentioned that GIPL is the second largest Global Distribution System (GDS) for the travel industry to help traditional and online travel Agencies by providing travel information, advance technology for transaction processing and the computerized reservation system (CRS) which is being used by travel agents globally for their business of tour ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual passenger through the Reserve Bank of India who appointed foreign exchange brokers for the amount to be passed in foreign currency to the agents in overseas countries. Otherwise also, in some cases of individual customer approaching the appellant, later is receiving foreign exchange under travel quota scheme which is later passed on to overseas agents as cost towards hotel accommodation in their country. Same is also done by RBI Licensed foreign exchange broker as per the entitlement of individual passenger under travel quota scheme of RBI. Since the appellant himself is in no way converting Indian rupee into foreign exchange and is not dealing with foreign exchange in any other manner, the activity is wrongly alleged to be a taxable activity of Banking and Financial Services. All demands confirmed are therefore prayed to be set aside. 5.4 Finally it is submitted that extended period has wrongly been invoked while issuing the impugned show cause notice. The appellant is not rendering any taxable services except for the services of booking air tickets. Service tax on the commission received from the said services is already discharged by the appellant. The appellant had provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 104/2023 passed on 19.10.2023 qua the reference by the Division Bench of Tribunal at Mumbai after taking a contradictory opinion as was taken in the case of Cox Kings (India) Ltd. (supra). 6.1 Learned Departmental Representative further impressed upon that the income from the sale and purchase of foreign exchange is an activity of Banking and other Financial services which is liable to tax. Confirmation of service tax amounting to Rs.2,037/- is affirmed. Similarly there is no infirmity when the service tax on the incentives received for arranging the Eurail passes is concerned. It is mentioned that despite the appellant was rendering taxable services but still was not showing the amounts received in the returns as service tax was not being paid. The act is a definite act of suppression. Hence, the extended period has rightly been invoked while issuing the impugned show cause notice. With these submissions, the order under challenge is prayed to be upheld and appeal is prayed to be dismissed. 7. Having heard the rival contentions. The issue wise taxability is discussed as follows: 7.1 Service Tax with respect to Business Auxiliary Services allegedly rendered to M/s. GIPL . 7.1.1 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In this category, the tour is performed entirely outside India, to facilitate Indian tourists visit various locales, in territories outside India. 7.2.2 Foremost we also need to look into the definition of tour operator as given under Section 65 (44) of the Finance Act, 1994 (hereinafter referred as the Act). We observe that definition has undergone various amendments since 01.09.1997 to 16.05.2008. The same are as follows: (1) 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 accommodation, siteseeing, 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 Ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in 1997. Thus it is clear that the definition provides that a tour Operator would include any person engaged in the business of operating tours in the tourist vehicle covered by a permit granted under Motor Vehicles Act or rules made there under in addition to a person engaged in the business of planning, scheduling, organizing or arranging tours by any mode of transport. The appellant herein is admittedly organizing/arranging tours by making arrangements for accommodation, sightseeing and other similar activities. In the light of entire above discussion and the said apparent observation about appellant s activity, we hold that the appellant is rendering the taxable service of tour operators. The demand on inbound tours count has rightly been confirmed. 7.2.5 With respect to the outbound tours, the appellant has raised the contention that the activity amounts to the export of service, hence liability on outbound tours cannot be fasten. We observe that the appellant operate and facilitate outbound tours whereby Indian tourists are provided services in relation to tourism outside the Indian territory to visit foreign locales. The Hon ble Supreme Court in All India Fedn. of Tax P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the aforesaid analysis we conclude that the consideration received for operating and arranging outbound tours, even if falling within the scope of the amended definition of tour operator ; (provided by the assessees and consumed by their tourist customers beyond Indian territory), is not liable to levy and collection of Service Tax, under provisions of the Act. 7.2.8 This issue is otherwise no more res integra as stands decided by the Larger Bench of this Tribunal in M/s. Cox Kings Limited Vs. Commissioner (TAR) Mumbai in Service Tax Appeal No. 386 of 2012 decided on 19.10.2023. Hence we hold that tax demand of Rs.6,54,828/- on outbound tours has wrongly been confirmed. Order under challenge is hereby set aside to that extend. 7.3 Service tax on the amount received for Eurail passes for the travelers 7.3.1 From the record the appellant is selling Eurail passes and thereby arranging tours in Europe by Eurail . The appellant is purchasing same Eurail passes from other Indian tour operators and selling them to the tourists. However, the appellant is charging some amount from the tourists, which can be termed as service charges for arranging Eurail passes for them. Therefore, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction of the appellant. The only entry could be under (a) (iv), (vii) or under (b) of Section 66(12) of the Act. However, the appellant states that they are not having any license for brokerage in foreign exchange and they are not carrying out any such activity. Therefore, neither under (a) (iv) or under (a) (ix) or under (b), there is a case for bringing the impugned transaction under the category of Banking and other Financial Services. The demand is therefore liable to be set aside. 7.5 Finally coming to the issue of invocation of extended period for issuing show cause notice, we observe that the entire above discussion clarifies that the activities as that of using CRS of GPIL/ITQPL etc. was under consideration and at the relevant point of time had the contradictory decisions. So is true as far as the activity of Tour Operator s Services is concerned. During the relevant time the decisions were in favour of the assessee-appellant. The said confusion about the nature of the impugned activities/services is sufficient for us to hold that appellant did not take service tax registration on the bona fide ground. We do not find anything on record which may prove a positive act o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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