2020 (9) TMI 295 - AAR - GST

GST Classification: Tour Operator Services Exemption Denied

In Re: M/s Crown Tours and Travels,

In Re: M/s Crown Tours and Travels, - 2020 (41) G. S. T. L. 70 (A. A. R. - GST - Raj.) , [2020] 81 G S.T.R. 393 (AAR) Issues Involved:1. Classification of services provided by the applicant.2. Applicability of the 5% GST rate under heading 9985(i) for the services provided by the applicant.Issue-Wise Detailed Analysis:1. Classification of Services Provided by the Applicant:The applicant, engaged in providing local transportation services along with services like elephant rides, lunch/dinner, local sightseeing, and guide services, sought clarity on whether these services fall under the 'Supply of tour operator services' as per the GST Act. The applicant raises a single invoice for all services provided to the Main Tour Operator (MTO), which includes charges for local transportation and other ancillary services. The applicant argued that these services collectively constitute a packaged tour, thus qualifying as tour operator services under heading 9985(i) of the Rate Notification.2. Applicability of the 5% GST Rate under Heading 9985(i):The applicant contended that the services provided should attract a 5% GST rate as per the Notification No. 11/2017-Central Tax (Rate), which prescribes a 2.5% central tax rate on tour operator services, subject to certain conditions. The applicant asserted that they meet the conditions specified in the Rate Notification, including not availing of input tax credit (ITC) for goods and services used in supplying the service, except for input services from another tour operator, and issuing a bill inclusive of all charges for the services provided.Findings, Analysis & Conclusion:1. The applicant is engaged in providing local transportation services and other ancillary services such as elephant rides, guide services, and sightseeing to tourists engaged by various Main Tour Operators (MTOs).2. The Authority for Advance Ruling (AAR) previously ruled that the applicant is not a tour operator as per the definition and conditions provided in Serial No. 23(i) of Notification No. 11/2017-Central Tax (Rate). The current application includes an additional fact that the applicant provides transportation services to tourists, which the MTOs treat as tour operator services.3. The key question was whether the applicant qualifies as a tour operator under the definition and conditions enumerated in Serial No. 23(i) of Notification No. 11/2017-Central Tax (Rate).4. The Notification defines a tour operator as 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 and includes any person engaged in the business of operating tours.5. The definition includes four elements: planning, scheduling, organizing, and arranging tours; providing accommodation, sightseeing, and other similar services; engaging any mode of transport; and being engaged in the business of operating tours. The notification also delineates two conditions: restriction of input tax credit and inclusion of charges for accommodation and transportation in the bill.6. The second condition emphasizes that a bill issued by a tour operator should include charges for both accommodation and transportation. The applicant, however, only provides transportation and ancillary services, not accommodation. Therefore, the applicant does not satisfy the conditions specified under Serial No. 23(i) of Notification No. 11/2017-Central Tax (Rate).Ruling:The services provided by the applicant do not fall under the purview of Serial No. 23(i) {Chapter heading 9985} of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended), and the 5% GST rate is not applicable.