Tribunal exempts out-bound tour operator from service tax under Finance Act, 1994

The Tribunal ruled in favor of the appellant, an out-bound tour operator, determining that services performed outside India were not subject to service tax under the Finance Act, 1994. Citing a Circular by the CBEC, the Tribunal granted a waiver of pre-deposit and a stay against recovery during the appeal process, as the appellant's services were prima facie covered by the Circular. Despite services being partly in India, the Tribunal found the Circular applicable, leading to the exemption from service tax liability for services provided outside India.

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Issues:
1. Taxability of out-bound tour operator services under 'tour operator' services.
2. Applicability of service tax under the Finance Act, 1994.
3. Claim for abatement under Notification No. 12/2004.
4. Interpretation of Circulars issued by the department.
5. Consideration of services provided outside India as export of service.

Analysis:

1. The appellant, engaged in providing out-bound tour operator services, argued that the services performed in out-bound tours were outside India, thus not liable to service tax under the Finance Act, 1994. The appellant relied on Circulars, Supreme Court decisions, and OECD guidelines to support their claim that the tours qualified as export of service under the Export of Service Rules, 2005.

2. The Jt. CDR contended that as per the definition of 'tour operators' service, the appellant, by planning, scheduling, and organizing tours within India, fulfilled the criteria of being a 'tour operator.' Therefore, the services provided by the appellant were deemed to be rendered in India, making them subject to service tax under the Finance Act, 1994.

3. The Tribunal considered the submissions from both sides regarding the definition of 'tour operator,' amendments to the definition, OECD Guidelines, and the Export of Service Rules. However, the Tribunal found that a Circular issued by the Central Board of Excise & Customs (CBEC) clarified the issue of taxability of tour operator services in connection with Haj & Umrah pilgrimage, stating that services performed outside India are not subject to service tax. The Tribunal opined that the services provided by the appellant were prima facie covered by the Circular, warranting a waiver of pre-deposit and granting a stay against recovery during the appeal.

4. Given that the services were performed partly in India and partly outside India, the Tribunal concluded that the Circular's provisions applied to the appellant's case. The Tribunal acknowledged the appellant's prima facie case based on the Circular and waived the pre-deposit requirement, considering the amount already paid by the appellant as sufficient. Consequently, the Tribunal granted a stay against recovery pending the appeal process.

In conclusion, the Tribunal's judgment favored the appellant based on the interpretation of the Circular, which exempted services performed outside India from service tax liability, leading to the waiver of pre-deposit and the grant of a stay against recovery during the appeal.

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