2018 (12) TMI 955 - AT - Service Tax

Tribunal Upholds Decision on Tour Operators' Business Auxiliary Services

The Tribunal upheld the department's decision regarding the appellants, Tour Operators, providing services falling under 'Business Auxiliary Services' as ... Business Auxiliary Services - appellants received certain commission on an agreed basis from the hotels on the payment made by the customers - Held that:- The appellants are suggesting the names of the hotels to their customers to whom they are also booking travelling facilities and arranging for the itineraries. The appellants are receiving certain amounts from the hotels on the event of the customers checking into the hotels and paying room rents, etc. This activity certainly falls in the category of ‘Promotion or Marketing of service provided by the client’. The definition of Promotion and Marketing submitted by the appellants relying on Webster’s Dictionary would not be of any help to them in view of the categorical and clear mention of Promotion or Marketing of service under Business Auxiliary Services - appeal dismissed - decided against appellant. Issues:Interpretation of 'Business Auxiliary Services' under Section 65(19) of the Finance Act, 1994.Analysis:The case involved the appellants, registered as Tour Operators, who were alleged by the department to be providing services falling under 'Business Auxiliary Services' as per Section 65(19) of the Finance Act, 1994. The dispute arose when the department issued a show-cause notice to the appellants, which was confirmed by the Asst. Commissioner and upheld by the Commissioner (A). The primary contention of the appellant was that they were not working as agents of the hotels but merely suggesting hotel names to clients, receiving amounts from hotels based on customer payments. The appellant argued that the activity did not fall under 'Promotion or Marketing' as defined in the Webster's Dictionary. However, the department maintained that the appellants were indirectly promoting the services of the hotels, thus falling under 'Promotion or Marketing of service provided by the client' as per the definition of Business Auxiliary Services under Section 65(19).Upon analyzing the definitions and activities involved, the Tribunal found that the appellants' actions of suggesting hotel names to clients and receiving amounts from hotels upon customer check-ins constituted 'Promotion or Marketing of service provided by the client' under Business Auxiliary Services. The Tribunal noted that the appellants were benefiting monetarily by giving leads to guests or clients for various hotels, which aligned with the definition provided under the Act. The Tribunal rejected the appellant's reliance on Webster's Dictionary for the definition of Promotion and Marketing, emphasizing the clear mention of these terms within the context of Business Auxiliary Services. Consequently, the Tribunal dismissed the appeal, upholding the impugned order and finding no merit in the appellant's arguments.In conclusion, the Tribunal's judgment centered on the interpretation of 'Business Auxiliary Services' under Section 65(19) of the Finance Act, 1994, specifically addressing the activities undertaken by the appellants in suggesting hotel names to clients and receiving monetary benefits from hotels. The decision highlighted the alignment of the appellants' actions with the definition of 'Promotion or Marketing of service provided by the client,' ultimately leading to the dismissal of the appeal.