TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether facilitation of hotel room bookings through the assessee's website, with commission received from hotels and collection of booking amounts from customers for remittance to hotels, fell within the scope of tour operator service under the Finance Act, 1994; (ii) whether service tax was leviable on the hotel accommodation component for the period prior to 01.05.2011 and whether the demand on the gross amount could be sustained; (iii) whether the extended period of limitation and the consequential penalties were invocable.
Issue (i): Whether facilitation of hotel room bookings through the assessee's website, with commission received from hotels and collection of booking amounts from customers for remittance to hotels, fell within the scope of tour operator service under the Finance Act, 1994?
Analysis: The statutory definition of tour operator service requires engagement in planning, scheduling, organising or arranging tours by any mode of transport, and the reference to accommodation is only incidental to such tour activity. Standalone arrangement of hotel accommodation, without operating tours in a tourist vehicle or carrying out the core tour-related functions, does not satisfy the statutory description. The booking activity of the assessee was confined to facilitating room reservations and collecting amounts for onward remittance after retaining commission, which could not be treated as tour operation merely because accommodation was involved.
Conclusion: The classification as tour operator service was not sustainable and this issue was decided in favour of the assessee.
Issue (ii): Whether service tax was leviable on the hotel accommodation component for the period prior to 01.05.2011 and whether the demand on the gross amount could be sustained?
Analysis: Taxability of hotel accommodation as a distinct service arose only with the introduction of the specific levy with effect from 01.05.2011. For the disputed period, the accommodation component was not independently taxable, and the commission retained by the assessee had already suffered tax. In these circumstances, demand on the entire gross amount collected from customers could not be sustained, and the objection of double taxation did not survive in a case where the underlying levy itself was unavailable for the relevant period.
Conclusion: Service tax was not leviable on the hotel accommodation component for the disputed period, and the demand on the gross amount was unsustainable; this issue was decided in favour of the assessee.
Issue (iii): Whether the extended period of limitation and the consequential penalties were invocable?
Analysis: The record showed repeated departmental correspondence and prior awareness of the assessee's activities, which negatived any allegation of suppression with intent to evade tax. Where the classification itself was debatable and the levy on the underlying activity was not available for the relevant period, invocation of the extended period could not be justified. Once the demand itself failed on merits, the basis for penalties also disappeared.
Conclusion: The extended period and consequential penalties were not invocable, and this issue was decided in favour of the assessee.
Final Conclusion: The demand, interest and penalties were set aside in full, and the assessee obtained complete relief.
Ratio Decidendi: Standalone facilitation of hotel bookings is not tour operator service unless the statutory tour-related requirements are met, and a levy introduced later cannot be applied to the earlier period; absence of suppression also bars invocation of the extended limitation period.
TaxTMI 
