2016 (8) TMI 1237 - AT - Service Tax

Tribunal rules in favor of appellant on 'Tour Operator Service' definition challenge

The Tribunal ruled in favor of the appellant, determining that their activities did not constitute 'Tour Operator Service' as defined under Section ... Tour Operator Service - the appellant offers promotional schemes to its customers from time to time, which include coupon for staying in hotels and other facilities - The promotional schemes offered by the appellant was considered by the department as a taxable service, classifiable under the category of ‘Tour Operator Service’ - Held that: - On perusal of the package features mentioned in the Circular No.347 dated 15.03.2005, it transpires that the appellant is not providing any consultancy in the nature of planning, scheduling, organizing and arranging tours on behalf of a particular tour for the passengers. Thus, the activities provided by the appellant will fall outside the scope and ambit of ‘Tour Operator Service’ - Tribunal in the case of Jet Airways India Ltd. [2016 (3) TMI 164 - CESTAT MUMBAI] has held that various tour packages provided by the airlines to the passengers (similar to the package offered by the appellant) shall not be covered under the purview of Tour Operator Service - appeal allowed - decided in favor of appellant. Issues:Interpretation of the definition of 'Tour Operator Service' under Section 65(115) of the Finance Act, 1994 for the purpose of service tax liability.Analysis:The case involved the appellant, engaged in the business of transportation of passengers and goods by aircraft, offering promotional schemes including transportation to tourist destinations. The department considered these schemes as taxable 'Tour Operator Service'. The appellant challenged this classification, arguing that they do not engage in planning, scheduling, or organizing tours. The Tribunal analyzed the definition of 'Tour Operator' under Section 65(115) of the Finance Act, 1994, which includes persons engaged in planning, organizing, or arranging tours. The Circular provided by the appellant detailed package features, showing the all-inclusive nature of the packages. However, the Tribunal found that the appellant did not provide consultancy in planning tours for passengers, thus falling outside the scope of 'Tour Operator Service'.The appellant's argument was supported by a previous decision involving Jet Airways India Ltd., where it was held that airlines offering tour packages to passengers did not fall under 'Tour Operator Service'. The Tribunal emphasized that to be classified as a 'Tour Operator', the entity must be engaged in planning, scheduling, or organizing tours, which was not the case with the appellant. The judgment highlighted the importance of the specific activities mentioned in the definition of 'Tour Operator Service' and how they must be met for classification.The Tribunal distinguished a judgment of the Allahabad High Court, stating that it referred to the pre-amended definition of 'Tour Operator Service', which did not include air travel with ancillary features like accommodation. The Court did not specifically address the planning, scheduling, organizing, or arranging of tours. This distinction further supported the Tribunal's decision that the appellant's activities did not fall under the taxable category of 'Tour Operator Service'.In conclusion, the Tribunal found no merit in the department's classification of the appellant's activities as 'Tour Operator Service'. The impugned order was set aside, and the appeal was allowed in favor of the appellant, emphasizing the importance of meeting the specific criteria outlined in the definition for such classification.