2015 (11) TMI 908 - AT - Service Tax

Appellant not liable for service tax as Tribunal rules activities not taxable as 'tour operator services'

The Tribunal concluded that the appellant's activities, which involved offering Jet Escapes packages without planning or organizing tours, did not ... Demand of service tax - whether the activity undertaken by the appellant would get covered as taxable service provided under “tour operator service” - Held that:- Appellant is offering Jet Escapes Package to their various passengers who visit their website for booking air travel service offered by them. It is also undisputed that the appellant has entered into a contract with Hotels Chains for accommodating their passengers who have opted for “Jet Escapes” Package. On the factual matrix as stated above we require to look into the definition of “tour operator service” as given under Section 65(115) of the Finance Act, 1994. - definition also mandates for the services to be rendered by persons engaged in business of operating tours in a tourist vehicle or a contract carriage. It is on record that the passengers when they wants to opt for “Jet Escapes Package”, organize own travel dates and appellant is not helping them in planning or organizing or scheduling of tours. We find that though not on the very same issue, this Bench in the case of Divisional Controller (2013 (12) TMI 915 - CESTAT MUMBAI) was considering the services rendered by the appellant therein as to whether this service would fall under the category of “tour operator services”. The appellant in that case was providing contract carriage and stage carriage to various individuals/customers and it was considered as the said service would fall under the category of “tour operator service”. Tour operator service means the person should be engaged in the business of planning, scheduling or arranging the tours. In the absence of any such activity undertaken, the services cannot be considered as tour operator service and liable to be taxed. - appellant herein has not planned, scheduled or organized tours for their passengers. In our considered view the ratio of this Tribunal s judgement in the case of T.N. State Trans. Corpn. Kumbakonam Ltd. (2009 (2) TMI 90 - CESTAT CHENNAI) will be applicable in the case in hand and we have to hold that the appellant is not covered under the category of tours operator service - impugned order is unsustainable and liable to be set aside - Decided in favour of assessee. Issues:1. Whether the appellant's activity falls under taxable service as a 'tour operator service.'Analysis:1. The appellant, engaged in operating airlines and offering package tours, was alleged by the Revenue to be liable for service tax under tour operator services. The appellant contested the show-cause notice on both merits and limitation grounds. The adjudicating authority and the first appellate authority upheld the demands with interest and penalties. The issue was whether the appellant's activity qualified as a taxable service under 'tour operator service.'2. The appellant's counsel argued that the appellant did not conduct tour operator services as they did not plan, organize, or arrange tours. The appellant offered Jet Escapes packages to customers, who booked tickets and decided travel dates independently. The counsel cited precedents and an audit report to support the argument that the appellant's activity did not fall under the tour operator services category.3. The Departmental Representative contended that the appellant's activities, including hotel bookings and accommodation arrangements, constituted tour operator services. Referring to an agreement with a hotel group, it was argued that the appellant facilitated planning and scheduling of holidays for customers, falling within the definition of tour operator services.4. The Tribunal analyzed the definition of 'tour operator' under Section 65(115) of the Finance Act, 1994. It was observed that the appellant's services did not involve planning, scheduling, or organizing tours for passengers opting for Jet Escapes packages. Precedents were cited to emphasize that engagement in planning tours was essential for an activity to be classified as tour operator services.5. The Tribunal referenced a case involving package tour operators and highlighted the expansion of the levy on tour operator services. It was noted that the appellant's case did not involve planning, scheduling, or organizing tours for passengers, aligning with the precedent set in earlier judgments.6. Ultimately, the Tribunal concluded that the appellant's activities did not fall under the category of tour operator services. The impugned order was set aside, and the appeal was allowed based on the finding that the appellant was not liable for service tax under tour operator services.7. The judgment clarified the distinction between tour operator services and the appellant's business model, emphasizing the necessity of planning and organizing tours to qualify as a tour operator. The decision was based on a thorough analysis of the appellant's activities and the legal framework governing tour operator services.