Classification of Ancillary Services for Tour Operators under GST: 18% tax rate confirmed

The Authority for Advance Ruling determined that the Ancillary Services provided by the applicant to various tour operators are classified under Chapter heading 9985(iii) as 'Support Services' and not as 'Tour Operator Services.' Therefore, the applicable rate of GST for these services is 18% (SGST 9% + CGST 9%).

---

---

Issues Involved:
1. Classification of Ancillary Services provided by the applicant.
2. Applicable tax rate for Ancillary Services provided to various tour operators.

Detailed Analysis:

1. Classification of Ancillary Services:
The applicant, engaged in providing 'Tour Operator' and 'Support Services,' sought clarification on whether certain Ancillary Services (e.g., Elephant Ride, Guide Charges, Assistance Charges, etc.) provided to main tour operators fall under the category of 'Tour Operator Services' or 'Support Services' under GST.

The applicant argued that these Ancillary Services are integral to the main tour services and should be classified under Heading 9985(i) as 'Tour Operator Services,' which attracts a GST rate of 5%. The term 'Tour Operator' as per Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 includes any person engaged in planning, scheduling, organizing, arranging tours, which may include arrangements for accommodation, sightseeing, or other similar services by any mode of transport.

However, the jurisdictional officer opined that the services supplied fall under SAC heading 9985(ii) as 'Support Services,' attracting a GST rate of 18%.

2. Applicable Tax Rate for Ancillary Services:
The ruling emphasized that the definition of 'Tour Operator' necessitates the inclusion of transportation services. The applicant's services, which include sightseeing and other similar services but exclude transportation and accommodation, do not meet the criteria for 'Tour Operator Services.' Therefore, the services provided by the applicant cannot be classified under SAC 9985(i) but rather under SAC 9985(iii) as 'Support Services.'

The relevant portion of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 was examined, which specifies that to qualify as 'Tour Operator Services,' the bill must be inclusive of accommodation and transportation charges, and credit of input tax charged on goods and services used in supplying the service must not be taken, except for input services in the same line of business.

Since the applicant does not provide transportation and accommodation services and does not issue a consolidated bill inclusive of these charges, the services provided do not satisfy the conditions for 'Tour Operator Services.'

Conclusion:
The Authority for Advance Ruling concluded that the Ancillary Services provided by the applicant to various tour operators fall under Chapter heading 9985(iii) as 'Support Services' and not as 'Tour Operator Services.' Consequently, the applicable rate of GST for these services is 18% (SGST 9% + CGST 9%).

Ruling:
a. The Ancillary Services provided by the applicant to various tour operators fall under Chapter heading 9985(iii) {Support Services} of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 (as amended).
b. The applicable rate of GST for Ancillary Services provided by the applicant to various tour operators is 18% (SGST 9% + CGST 9%).

---