2023 (10) TMI 1388 - AT - Service Tax

Service tax liability for outbound tour services depends on specific factual circumstances under section 65(115)

M/s Cox & Kings Limited (formerly known as Cox and Kings (India) Limited) Versus Commissioner (TAR) -Mumbai

M/s Cox & Kings Limited (formerly known as Cox and Kings (India) Limited) Versus Commissioner (TAR) -Mumbai - TMI Issues Involved:1. Whether the service provided by the appellant is taxable under Section 65(105)(n) of the Finance Act.2. Whether the appellant is providing the said service within the taxable territory.Summary:Issue 1: Taxability of Service under Section 65(105)(n) of the Finance ActA division bench of the Tribunal at Mumbai expressed doubts on an earlier decision by the Principal Bench of the Tribunal at New Delhi in M/s Cox & Kings India Limited vs. Commissioner of Service Tax, New Delhi, regarding the taxability of services related to 'outbound tours' under Section 65(105)(n) of the Finance Act. The appellant organizes pre-planned and customized package tours, classified into domestic, inbound, and outbound tours. The appellant claims to have paid service tax on domestic and inbound tours but not on outbound tours. The Principal Bench had previously held that the activity of providing services in relation to outbound tours would fall outside the scope of a 'tour operator' if the tour is not conducted in a tourist vehicle covered by a permit under the Motor Vehicles Act.The division bench at Mumbai, however, observed that all activities conducted by the appellant fall within the scope of 'planning, scheduling, organising or arranging tours' and are completed before the client leaves India. The services are thus provided and consumed within India, making them taxable under the amended definition of 'tour operator' effective from 10.09.2004. The Tribunal concluded that the earlier decision in Cox & Kings may not be applicable to outbound tours over the period the activity had been taxable, and the taxability of the appellant's activities must be decided based on the facts and the intent of the Finance Act.Issue 2: Provision of Service within the Taxable TerritoryThe referral bench at Mumbai also sought an opinion on whether the appellant's services were provided within the taxable territory. The dispute pertains to the period from 01.04.2005 to 31.03.2011, prior to the 'negative list' regime introduced in July 2012. During this period, the tax on services was limited to enumerated activities rendered by a person to another person within India. As both the service provider and recipient were located in India, the services were taxable without considering the geographical significance of the 'taxable territory.'Conclusion:The Tribunal concluded that the taxability of the appellant's activities must be decided based on the facts of the case and the intent of the relevant sections of the Finance Act. The dispute does not require consideration of the 'taxable territory' as it pertains to a period before the 'negative list' regime. The papers are to be placed before the division bench to decide the appeal on merits.