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Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

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GST UPDATE ON RATE APPLICABLE ON ANCILLARY SERVICES PROVIDED TO TOUR OPERATORS - 017/2020-21

GST UPDATE ON RATE APPLICABLE ON ANCILLARY SERVICES PROVIDED TO TOUR OPERATORS - 017/2020-21
 
GST UPDATE ON RATE APPLICABLE ON ANCILLARY SERVICES PROVIDED TO TOUR OPERATORS
Brief Facts-The applicant is engaged in the business of providing the tour operators with the ‘Ancillary services’ such as Elephant Ride, guide charges, assistance charges, home host dinner, lunch/dinner at local restaurants, boat ride, camel ride, and saree turban tying, etc. Moreover, ancillary services do not include planning, scheduling, arranging tours, organizing tours by any mode of transportation. The Applicant receives service orders from the main tour operator to provide a range of services to the passenger/ tourist. There is a contractual understanding between the tourist and the main tour operator to provide a complete packaged tour. The applicant raises bill for the ancillary services provided and a consolidated bill is raised by the main tour operator to the customers. The important thing to note here is that the accommodation and transport charges are included by the main tour operator in the bill, not by the applicant.

Issues-1.Whether the ancillary services provided to the tour operator falls within the ambit of ‘support services’ or ‘supply of tour operator services’?
2. What will be the rate of GST applicable to the ancillary services provided by the applicant?

Background- Vide Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017, the rate of tax for supply of tour operator services has been specified at the rate of 2.5% under Heading 9985(i). The rate specified for other support services under Heading 9985(iii) is 9%.
In the Rate Notification, the phrase Tour Operator’ has been defined to mean: –
a. Any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport
b. any person engaged in the business of operating tours.
Moreover, the meaning of term Tour has not been defined in the Rate Notification, therefore, reference is made to the dictionary meaning of the term Tour’. As per dictionary, tour means a travel from one place to another by any mode of transportation.
 
Contentions by Applicant- As per the Rate Notification, Tour Operator include any person engaged in the business of operating Tours. The term ‘business of operating tours’ is very exhaustive and it will include any activity which are incidental and ancillary to the business of operating tours like elephant ride, guide services, boat ride, local sightseeing etc. Hence, the applicant is of the opinion that he falls under the definition of tour operator.

Reasoning by Authority and Decision- In view of the definition of tour and tour operator, supply of transport service in a tour package is very essential to classified as tour operator under GST Act.
In addition to this, two conditions are, essential to categorize a tour operator under 5% tax category which are mentioned below –
a. Bill issued for supply of tour operating service should be a consolidated one i.e. inclusive of accommodation and transportation charges.
b. Provided that credit of input tax charged on goods and services used in supplying the service [other than the input tax credit of input service in the same line of business (i.e. tour operator service procured from another tour operator)] has not been taken.
The Rajasthan AAR passed the advance ruling based on the rationale that the applicant is not a tour operator as it did not charge any charges for the accommodation and transportation services, therefore, the services provided by the applicant does not fall within the ambit of ‘supply of tour operator services’. The AAR after taking into consideration the work of the applicant, observed that the services provided to the tour operators are covered within the ambit of ‘Support Services’ and as a result 18% GST wherein 9% CGST and 9% SGST is applicable.

In case of Golden Vacations Tours and Travels, AAR ruled that the applicant, if arranges for clients only accommodation in hotels, is supplying a service classifiable under SAC 998552(Reservation services for accommodation, cruises and package tours). lt is taxable under Sl No. 23(iii) of the Rate Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 at the rate of 18%. Moreover, the applicant is eligible to claim the input tax credit as admissible under the law.
Advance Ruling Authority has been strictly analysing each and every case before passing out the judgement. If the taxpayer is involved in providing any kind of ancillary services of tour operators and not qualifying all the parameters required for falling into 5% category, then there is no chance that the taxpayer can avail the benefit of concessional GST rate of 5%.
But at the same time, it is to be kept into mind that advance ruling is applicable on person seeking the same and it has no binding effect on other person.
 
This is solely for educational purpose.

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