TOUR OPERATOR SERVICE

[Kunal Aggarwal]

Hi,

A tour reseller is selling tour package after adding markup. Tour seller is charging 4.35% Service tax on tour and after that Tour reseller add markup and sold it to customer. what should be the sevice tax applicablity on that on point of Tour Reseller. He has to pay service tax on markup only or full invoice amount.

[KASTURI SETHI]

As per Section 67(3) of the Finance Act, 1994, gross amount charged is to be considered for payment of ST. See the definition of 'consideration' and 'Gross Amount Charged' under Section 67. The admissible abatement is to be deducted from the gross amount while arriving at taxable value.

Relevant extract of Section 67

"(3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service.

(4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed.

Explanation. - For the purposes of this section, -

(a) [“consideration” includes -

(i) any amount that is payable for the taxable services provided or to be provided;

(ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed;

(iii) any amount retained by the lottery distributor or selling agent from gross sale amount of lottery ticket in addition to the fee or commission, if any, or, as the case may be, the discount received, that is to say, the difference in the face value of lottery ticket and the price at which the distributor or selling agent gets such ticket.’.]

[(b)  *  *  *  * ]

(c) “gross amount charged” includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and [book adjustment, and any amount credited or debited, as the case may be, to any account, whether called “Suspense account” or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise.]]

[Ganeshan Kalyani]

The tour reseller will be able to take credit of the service tax charges by tour seller.

[KASTURI SETHI]

I agree with Sh.Ganeshan Kalyani, sir.

AI Summary

Gross amount charged governs service tax liability; reseller's taxable value is invoice-based but input credit is available. Valuation for service tax is based on the gross amount charged, which includes any amounts received before, during or after the service and falls within the statutory definition of 'consideration'. Taxable value is determined from that gross amount less any admissible abatement. A tour reseller can take credit for service tax charged by the tour seller, so input tax credit may offset the reseller's liability even though the declared base is the gross amount charged.