2026 (3) TMI 26 - AT - Service Tax

Tour Operator Service requires active tour planning; Airport Service requires airport authorization, so both contested service tax demands denied.

Sale of bundled promotional tour packages that do not involve active planning, scheduling, organising or arranging of tours does not meet the statutory ... Tour operator service - airport service (pre-amendment) Tour operator service - abatement eligibility - Whether the appellant's promotional 'tour packages' fall within the taxable category of Tour Operator Service and whether abatement claimed thereon was correctly disallowed. - HELD THAT: - The Tribunal examined the statutory definition of 'tour operator' and its component of planning, scheduling, organising or arranging tours and applied the Tribunal's earlier decision in the appellant's own case and the decision in Jet Airways. The packages offered by the appellant comprised airfare and ancillary accommodations/transfers but did not involve the appellant planning, scheduling or organising tours on behalf of passengers; passengers organised travel dates and the airline did not act as a tour organiser. On that basis the activity falls outside the ambit of Tour Operator Service and the appellant is not liable to pay service tax under that category. However, the appellant had collected service tax from customers and availed abatement in payment; since tax was collected and paid by claiming abatement, that amount is not refundable to the appellant. [Paras 9] The tour packages do not constitute Tour Operator Service; no service tax is payable under that category, but amounts already collected and paid claiming abatement are not refundable. Airport service (pre-amendment) - authorization by airport authority - Whether services provided by the appellant to its subsidiary in airport premises prior to the amendment effective 01.07.2010 fall within the definition of Airport Service. - HELD THAT: - The Tribunal applied the pre-amendment definition of 'Airport Service,' which required services to be provided by the airport authority or by a person authorized by it. The appellant was not a person authorized by the airport authority to provide services on behalf of the authority and the services were provided directly to the subsidiary, not on behalf of the airport authority. Reliance was placed on the Tribunal's decision in Soft Touch Aviation and the TRU clarification showing that prior to the 2010 amendment an authorization by the airport authority was a pre-condition for classification as Airport Service. On these findings, the appellant's activities do not qualify as Airport Service for the relevant period and no service tax is payable under that head. [Paras 10] The charges collected do not qualify as Airport Service for the pre-amendment period; no service tax is payable under that category. Final Conclusion: Both demands - under 'Tour Operator Service' and under 'Airport Service' for the specified periods - were held unsustainable; the impugned demand including interest and penalties is set aside and the appeal is allowed with consequential relief. Issues: (i) Whether the appellant's sale of promotional 'tour packages' falls within the definition of 'tour operator service' under Section 65(115)/Section 65(105)(n) of the Finance Act, 1994; (ii) Whether the services provided by the appellant to its subsidiary qualify as 'Airport Service' under Section 65(105)(zzm) of the Finance Act, 1994 for the period prior to 01.07.2010.Issue (i): Whether the appellant's tour packages constitute taxable 'tour operator service'.Analysis: The tour operator definition requires engagement in planning, scheduling, organising or arranging tours or operating tours in a tourist vehicle; the appellant's packages comprise bundled travel and ancillary features without undertaking planning, scheduling or organising tours on behalf of passengers. The Tribunal's prior decision in the appellant's own case and the Jet Airways decisions hold that similar airline-offered packages do not meet the statutory criteria for tour operator services. Notification No. 01/2006-S.T. provides abatement for tour operator services but does not alter the scope of the statutory definition.Conclusion: The appellant's tour packages do not fall within 'tour operator service' and no service tax liability arises under that category; however, the tax collected earlier under abatement is not refundable.Issue (ii): Whether services rendered to the appellant's subsidiary qualify as 'Airport Service' for the period prior to 01.07.2010.Analysis: The pre-01.07.2010 definition of Airport Service required that services be provided by an airport authority or by a person authorized by the airport authority to provide services on its behalf. The appellant was not authorized by the airport authority to provide services on behalf of the authority; D.O.F. No. 334/1/2010-TRU explains that the authorization requirement existed prior to the amendment effective 01.07.2010 and was removed thereafter. Tribunal precedent (Soft Touch Aviation) similarly found absence of authorization precluded classification as Airport Service for the pre-amendment period.Conclusion: The services in question do not qualify as 'Airport Service' for the relevant period prior to 01.07.2010 and no service tax liability arises under that category.Final Conclusion: Both contested categories of service tax demand (tour operator service and airport service) are set aside, the confirmed demands, interest and penalties are vacated, and the appeal is allowed.Ratio Decidendi: For the pre-amendment period, a taxable 'tour operator service' requires active planning, scheduling, organising or arranging of tours as defined in Section 65(115) of the Finance Act, 1994, and a taxable 'Airport Service' requires services rendered by the airport authority or by a person authorised by the airport authority to provide services on its behalf; absence of these statutory elements precludes classification as the respective taxable services.