M/s. Ram Krishna Travels P. Ltd VERSUS C.C.E & S.T. –Vadodara-I

Service Tax Appeal No. 473 of 2012-DB

(Arising out of OIO-05/STC/COMMR./BRC-I/2012 Dated- 17.09.2012 passed by

Commissioner of Central Excise Customs & Service Tax–VADODARA-I)

 

M/s. Ram Krishna Travels P. Ltd

VERSUS

C.C.E & S.T. –Vadodara-I

 

APPEARANCE:

Shri. Saurabh Dixit, Advocate for the Appellant

Shri. Prabhat K. Rameshwaram, Additional Commissioner (AR) for the Respondent

CORAM:

HON’BLE MR. RAMESH NAIR, MEMBER (JUDICIAL)

HON’BLE MR. RAJU, MEMBER (TECHNICAL)

Final Order No. A/ 10102 /2023

DATE OF HEARING: 03.10.2022

DATE OF DECISION:23.01.2023

RAMESH NAIR

Brief facts of the case are that the appellant are engaged in the

business of Tour Operator and Travel Agent. On scrutiny of the documents &

records seized/received/collected from the Appellant and from the statement

of Director of Appellant, it was observed by the department that appellant

had launched as specially designed tourist packages and they were also

providing similar packages for child passengers, but in this packages, over

and above the cost of air ticket they recovered an additional amount charges

for the stay, meals and sight-seeing etc. Appellant was also providing air

tickets without the above specially designed packages. The Appellant had

entered into agreement with certain Airlines under which special price are

given for bookings. The Appellant recovered actual ticket fares from the

customers but paid only the agreed price to the Airlines, which was much

lesser than the ticket cost. The amount paid to the airlines was lesser than

the amount charged/collected from the passenger/ tourist for offer

packages. The difference amount retained by way of their profit for the

facilities provided by them. Appellant has paid the service tax only on the 

commission received for Air Tickets. However, on scrutiny of the invoices,

the investigating officers observed that appellant had charged and collected

the extra amount from the customers for providing complementary package

in respect of tour packages. The appellant paid the service tax @.618% by

classifying the services as Air Travel Agent, whereas scrutiny of the invoices

clearly reveals that in case where complimentary packages was given, the

appellant has charged a higher amount and acted as Tour Operator. It

therefore, appears that in such cases appellant was liable to pay service tax

under the category of “Tour Operator” at applicable rates. The department

initiated show cause proceedings, seeking confirmation of the Service Tax

demand. The SCN dated 11-04-2011 issued in this regard, culminated in the

impugned adjudication order dated 17-09-2012, wherein Service Tax

demand of Rs. 5,00,42,872/- was confirmed along with interest. Besides,

equal amount of penalty was imposed under Section 78 of the Finance Act,

1994 and also under Section 76 and 77 of the said Act. Feeling aggrieved

with the adjudication order, the appellant has preferred the present appeal

before this Tribunal..

Shri. Saurabh Dixit, learned Counsel appearing for the appellant

submits that the issue in hand is no more res-integra inasmuch as identical

so-called package tour was provided by various Air lines such as Air India as

well as Jet Airways itself, i.e. charging only “published air fare” and providing

accommodation/ food/ sightseeing on complimentary basis to the

passengers, and the consistent judicial view suggest that no service tax is

leviable thereon as Tour Operator Service. He placed reliance on the

following decisions.



Jet Airways (India) Ltd. – 2016(3) TMI 164 –CESTAT Mum



Jet Airways (India) Ltd. – 2015(11)TMI 908 –CESTAT Mum



Air India 2016(8)TMI 1237 –CESTAT New Delhi

2.1 He further argued that be that as it may, while the appellant had

merely undertaken sale of air ticket in the capacity of Air Travel Agent, but

even assuming this is amounting to providing tour package, admittedly, it

was a pre-defined fixed package, without any element of separately

planning/scheduling/ organizing/ arranging tour at all. The Appellant, at the

most, was merely operating tour, which is not sufficient to attract the rigors

of “Tour Operator Service”. He placed reliance on the following decisions in

this regards.

(i) Cox & Kings India Ltd. – 2014(35) STR 817 (Tri- Del)

(ii) Commissioner Vs. Cox & Kings India Ltd. – 2015(39)STR J308 (SC)

2.2 He also submits that the present arrangement is on fixed date-wise

travel arrangements. While it is merely air ticket sales, at the most, it is

more in the nature of operating tour, if at all, and surely not planning

/scheduling/ organizing or arranging tour at all. The appellant merely pays

to Hotel/local travel agent directly for each passenger, as if it is a

complimentary gift provided by the Appellant to them. In that sense, the

arrangement is not different from giving free trolley bag/ gold coin/ gift

vouchers to customers who makes purchase with a vendor. Merely because

what is given free is accommodation instead of cash

gift/merchandise/voucher etc., it does not ipso facto become taxable.

Anyway, free service is not subject to levy of Service tax at all. The

Appellant had given free complimentary voucher to the passengers, who

could present such voucher and avail benefit of complimentary

accommodation, food, sightseeing etc. to the extent extended to them. Still,

the passengers pay only for the published air fare to the Appellant, and the

same is also treated as only air fare even for the LTC purpose of the

passengers.

2.3 He also submits that the dominant aspect of the transaction, even

going by section 65A of the Finance Act, 1994, is sale of air ticket. It is

treated as much by air line as also passengers and there is no doubt that

hotel stay/food etc. was merely complimentary and secondary. This is akin

to providing foods on complimentary basis in airlines, being part of air ticket

cost. The food purchased has already suffered appropriate tax in such case

and giving it on complimentary basis does not once again invoke Service tax

levy. Admittedly, this is not outdoor catering service and for same reasons,

complimentary accommodation/food etc. in the present matter is not Tour

Operator Service provided by the Appellant at all. Even in the present case,

the hotel accommodation /local travel agent service procured by the

Appellant from third parties and given on complimentary basis to passengers

has already suffered Service tax in the hands of the actual providers. That

such transaction cannot be taxed once again in the hands of the Appellant.

He placed reliance on the following decisions.



Sky Gourmet Catering Pvt. Ltd. 2009(14)STR 777(Tri. –Bang.)



Sky Gourmet Catering Pvt. Ltd. 2011(4)TMI 1267-Karnataka

High Court.



LSG Sky Chef 2017(49)STR 286 (Kar.)



Celebral Learning Solutions P. Ltd. 2013(32)STR 379 (Tri. Del)



Celebral Learning Solutions P. Ltd. 2018(10)GSTL 37 (Tri. Del)

2.4 He further submits that the reference can also be made to various

cases, where although certain complimentary after sales automobile services

were given by the agency selling vehicle, no amount was being recovered

separately for the same. Such amount was already loaded in the value of the

vehicle sold. Under such circumstances, it was held that such incidental and

ancillary activity cannot be separately charged to the levy of Service tax

under authorized service station service category. He placed reliance on the

following decisions.



ASL Motors Pvt. Ltd. 2008(9)STR 356 (Tri.- Kolkata)



K.P. Automobiles Pvt. Ltd. 2009(13)STR 389 (Tri. Del)



Kiran Motors Ltd. – 2009 (16)STR 74 (Tri. Ahmd)

2.5 He also argued that the issue can be said to be covered vide the

analogy drawn by the Hon‟ble Larger Bench in the case of Kaifila Hospitality

& Travels Pvt. Ltd. 2021(47)GSTL 140 (Tri. LB).

2.6 He also submits that, whenever the Appellant actually provides tour

operator service (other than complimentary accommodation/ food etc.) or

where extra amount is charged for the accommodation /food /sightseeing

purpose, they had paid applicable service tax under Tour Operator Service

during the material period itself.

2.7 Without prejudice to the above he also submits that in any case, even

if the charges made in the impugned order are acceptable, for the sake of

argument, in such case, appellant are eligible for claiming abatement under

Notification No. 01/2006-ST.

On the other hand, Shri. Prabhat K. Rameshwaram, learned Additional

Commissioner (Authorized Representative) opposed the contentions of the

Ld. Counsel by reiterating the finding of impugned order.

4. Heard both sides and perused the records.

The issue involved in this case is whether the activity undertaken by

the appellant would get covered under taxable service provided under “tour

operator service”. The case of the department is that as per the agreement 

with Indian Airlines, Jet Airways and Sahara Airlines the appellant recovered

the actual ticket fares from the customers but paid only the agreed price to

the Airlines, which was much less than the ticket cost. As per the said

agreement the appellant conducting tours, offering specially designed

package tour to their customers and are operating as “Tour Operator” and

are booking tickets as per the agreement. Whereas they are paying service

tax under the category of “Air Travels Agent Service” however appellant are

liable for payment of Service tax on the total value of ticket which includes

the cost of package tour provided by Appellant under the category of “Tour

operator Service”.

We find that the „Tour Operator‟ has been defined under Section

65(115) ibid to mean „any person engaged in the business of planning,

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‟. The scope of

service was substantially enhanced by the Finance Act (No.2) of 2004 by

including “ the person who are engaged in planning, scheduling, organizing

or arranging tour by wherever means like rail, air, waterway, etc.” On a

conjoint reading ibid, it reveals that the person providing business of

planning, scheduling, organizing or arranging tours should fall under the

ambit of taxable category of Tour Operator Service for the purpose of

payment of service tax. On perusal of the disputed package features, it is

clear that prima-facie appellant is not providing any consultancy in the

nature of planning, scheduling, organizing and arranging tour on behalf of

the particular tour for the passengers. We find that the Tribunal in the case

of Jet Airways India Ltd. (supra) has held that various tour packages

provided by the airlines to the passengers i.e similar to the packaged offered

by the appellant shall not cover under the preview of Tour Operator Service.

However the Judgments of Jet Airways India Ltd. and Air India supra relied

upon by the appellant here were not relied upon by them before the Ld.

Commissioner. Therefore, we are of the view that the said matter needs to

be re-considered by Ld. Commissioner in the light of the Judgments relied

upon by the appellant. The judgments relied upon by the appellant shall

apply directly only after verifying the facts of each case. As regards the

limitation, we observe that the same has also not been considered on its

true facts and the legal issue involved in the present case.We find that the

Appellant were paying service tax under the category of “Air Travel Agent 

Service” and also filed ST-3 accordingly. The adjudicating authority have not

properly examined the fact whether there is a suppression of facts or

otherwise. Accordingly, the issue of limitation was also not considered

properly.

We therefore set aside the impugned order and allow the appeal by

way of remand to the adjudicating authority. All the issues are kept open for

reconsideration. Needless to say that the appellant should be given sufficient

opportunity to make their submission and documents, if any required, and

also be granted the personal hearing before de novo adjudication.

(Pronounced in the open court on 23.01.2023)

(RAMESH NAIR)

MEMBER (JUDICIAL)

(RAJU)

MEMBER (TECHNICAL)

PRACHI