Tour operator service scope widened only from 10.09.2004, so hotel booking charges became taxable thereafter.

Hotel booking charges arranged by a tour operator were not covered within tour operator service under the pre-10.09.2004 definition, which was limited to operating tours in a tourist vehicle. The amendment effective 10.09.2004 expanded the scope to include planning, scheduling, organising or arranging tours, expressly covering accommodation and similar services. On that reading, hotel accommodation became taxable only from the amendment date, and the Board's clarification dated 17.01.2005 supported that interpretation. Service tax liability, with interest and penalties, therefore applied only for the post-amendment period, while the pre-10.09.2004 demand was unsustainable.

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Issues: Whether hotel booking charges arranged by a tour operator were taxable as part of tour operator service for the period prior to 10.09.2004, and whether tax, interest and penalty were payable only from the date of amendment onwards.

Analysis: The pre-amendment definition of tour operator covered only operating tours in a tourist vehicle, while the amended definition w.e.f. 10.09.2004 expressly brought within its scope planning, scheduling, organising or arranging tours including accommodation and similar services. On a plain reading of the two definitions, hotel accommodation was not covered under the earlier definition and was brought in only by the amendment. The Board's clarification dated 17.01.2005 also supported this position. The demand relating to the period prior to 10.09.2004 was therefore unsustainable, while liability could arise for the period after the amendment.

Conclusion: Hotel booking charges were not includible in the value of tour operator service prior to 10.09.2004, but tax, interest and penalties were payable for the period from 10.09.2004 onwards.

Final Conclusion: The order was modified to confine service tax liability to the post-amendment period, resulting in partial relief to the assessee.

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