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.
- 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
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