Whether the Outbound services as, booking of air tickets, arrangements of food, local travel, hotel stay at places outside India are covered under the category of ‘Tour operator Services’?

PJ/Case Laws/2012-13/1134

Case: TRAVEL CORPORATION INDIA LTD. V/S COMMISSIONER OF C. EX., COCHIN

Citation: 2012 (26) S.T.R. 8 (Tri.-Bang.)

Issue:- Whether the Outbound services as, booking of air tickets, arrangements of food, local travel, hotel stay at places outside India are covered under the category of ‘Tour operator Services’?

Brief Facts: - Applicant is engaged in arranging tours/tour packages within India and out of India. The present dispute relates to 'Out Bound Tours'. The applicant undertakes activities like booking of air tickets, arrangements for hotel stay at places outside India, food, local travel at places outside India, etc. They also undertake work relating to Visa formalities. Information found scattered in the show-cause notice, some paragraphs of Order-in-Original and letter given by the applicant to the Range Superintendent, prima facie indicates that the applicant is paying Service Tax under the category 'Air Travel Services" in respect of tickets booked from place in India to the first place outside India and air travel from last destination in foreign country to first destination in India. It appears from the order, the department has held that the entire amount collected from the tourists including airfare to-and-fro and towards expenses incurred in connection with arrangements like hotel stay and sight-seeing was to be included under the category of "Tour Operator Services". Accordingly, the Commissioner has confirmed the demand of Service tax of Rs. 62,59,120/- relating to the period 1-4-2004 to 31-3-2008 along with interest and imposed penalties under different Sections.

Appellant’s Contention: - The appellant contended that though some activities are undertaken in India relating to planning of tour package, the entire activities of travel, stay, sightseeing etc. take place in a foreign country and planning also involve coordinating with counter-parts in foreign countries. Appeallant relies on paragraph 2.6 of Board's Circular F. No. B. 43/10/97-TRU, dated 22-8-1997 and submits that the said Circular issued by TRU at the time of introduction of services clearly stipulates that the out-bound tours are not subjected to service tax under the category "Tour Operator Services" and also submits that the said Circular has not been withdrawn while issuing the Master Circular No. 96/7/2007-Service Tax, dated 23-8-2007. As per paragraph 7 of the said Master Circular, letters issued by TRU at the time of introduction of services have to be read in the light of the definition of the services. He also relies on the Stay Order No. 548/2011, dated 28-6-2011 in an identical case of M/s. Cox & Kings (India) Ltd. [2011 (24) S.T.R. 631 (Tri.)].

Respondent’s Contention: - The respondents on the other hand reiterating the findings and reasoning of the Commissioner in his order, submits that primarily, planning relating to the tour is done in India and therefore, pre-deposit of the dues as per the impugned order should be ordered.

Reasoning of Judgment: - The Hon’ble Tribunal held that planning and arrangements undertaken are primarily relating to out-bound tours and the same involve coordination with agencies outside India. He also held that the Board's Circular F. No. B.43/10/97-TRU, dated 22-8-1997 has treated the activities of out-bound tours as outside the purview of service tax. Further he find that the service tax undisputedly stands paid on airfares from India to the first destination in foreign country and for airfares from last destination abroad to first destination in India, as air travel services. In view of the above, and in view of the stay order already granted in similar case, he waived pre-deposit of the dues as per the impugned order and stay recovery thereof till the disposal of the appeal.

Decision: - The stay was granted.

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PJ/Case Laws/2012-13/1134

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