Tribunal Upholds Tax on Tour Operator Services

The Tribunal upheld the demand in the final order dated 6-10-2015, finding no mistake in the Commissioner(Appeals)'s decision that hiring buses for tours falls under 'tour operator' service, while transporting employees to the office is 'rent-a-cab' service. The Tribunal confirmed taxability for tours, picnics, etc., under 'tour operator' service, applying SEZ exemption and waiving penalties under Section 80 due to tax confusion. The extended demand period was justified as the appellant's activity was undisclosed to the department. The application for rectification of mistake was dismissed on 22/11/16.

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Issues:
Rectification of mistake in Tribunal's final order dated 6-10-2015; Contradictory findings in the order; No findings on the plea of limitation raised by the applicant.

Analysis:
The applicant filed for rectification of mistake in the Tribunal's final order dated 6-10-2015. The Counsel for the applicant argued that the findings in para 5.4 and 5.6 of the order were contradictory. The Commissioner(Appeals) had concluded that hiring buses for specific purposes like tours, picnics, etc., falls under the category of 'tour operator' service. However, the Commissioner(Appeals) had dropped the demand for hiring vehicles to transport employees to the office, classifying it under 'rent-a-cab' service. The Tribunal upheld the demand based on the Commissioner(Appeals) findings. The Tribunal found no apparent mistake in the order after considering both sides' submissions and perusing the record.

The Commissioner(Appeals) had previously decided in various cases that transporting workers to a common destination for work cannot be considered as planned, scheduled, or organized tours. The Tribunal upheld the demand for specific purposes like tours, picnics, etc., under the 'tour operator' service category. The exemption under Notification No. 4/2004-ST for services provided to SEZs was also deemed applicable. The Tribunal noted that confusion on taxability existed for a long period based on judicial pronouncements and waived penalties under Section 80. The Tribunal confirmed that activities like tours, picnics, marriages, etc., are planned and scheduled, falling under the 'tour operator' service category.

Regarding the issue of limitation, the Adjudicating authority invoked the extended period of demand as the appellant's activity was not brought to the department's notice. The department could not be expected to take action without knowledge of the appellant's activity. Thus, the extended period of demand was deemed rightly invoked. The Tribunal disposed of the application for rectification of mistake accordingly. The order was pronounced in court on 22/11/16.

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