TaxTMI 
TaxTMI 
2012 (5) TMI 346
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....r-in-appeal No. 10/2005 dated 29.4.2005. Pursuant to this remand order, the jurisdictional Deputy Commissioner framed the following two issues: (1) Whether train charges collected by the assessee from their customers and defrayed to the railways (Rs. 55,62,102/-), the amount collected from the customers and paid to Tirumala Tirupathi Devasthanam (TTD) for purchase of darshan tickets (Rs. 1,33,63,699/-) and the amount collected from the customers and paid as entry fee to Ramoji Film City (RFC) (Rs. 34,76,461/50) are to be included in the taxable value of tour operator service; (2) Whether 60% abatement from the gross amount charged by the assessee from their customers for package tour could be granted to the assessee in terms of Notification No. 39/97-ST dated 22.8.1997 for the purpose of payment of service tax. After examining the definition of 'tour operator' given under Section 65(44) of the Finance Act 1994, the adjudicating authority allowed the above abatement from the net amount (gross amount collected by the assessee from their customers minus the sum of train/TTD/RFC amounts) and, accordingly, quantified the amount of service tax to be paid by the assessee, w....
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....ommissioner's order. Appeal No. ST/138/2009: A show-cause notice was issued on 11.1.2008 to the assessee by the Commissioner alleging (a) undervaluation of package tour services for the period from 2003-04 to 2006-07 resulting in short-payment of service tax of Rs. 35,63,285/-, (b) non-payment of service tax amounting to Rs. 65,77,725/- on the amounts collected as waterfleet charges from customers for the period from 10.9.2004 to 31.3.2007, (c) short-payment of service tax to the extent of Rs. 1,03,172/- on mandap keeper service from 1.4.2006 to 31.3.2007 and (d) irregular utilization of CENVAT credit of Rs 8,11,058/- from October 2004 to February 2006. The show-cause notice demanded the said amounts of service tax under Section 73 of the Finance Act, 1994 with interest under Section 75 of the Act. It also proposed penalties on the assessee under Sections 76 & 78 of the Act. For the purpose of recovery of service tax for the extended period of limitation under the proviso to Section 73(1) of the Act, the show-cause notice alleged that the factum of having collected taxable amounts was suppressed by the assessee in their ST-3 returns. All the allegations were denied by the assesse....
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....assessee. In adjudication of the dispute, the Additional Commissioner confirmed the demand of service tax against the assessee under Section 73(2) of the Act and appropriated an amount of Rs. 14,31,658/-already paid (under protest) by them. Interest on tax was demanded under Section 75 of the Act. Penalty at the rate of Rs. 200/- per day or 2% per month was imposed under Section 76 of the Act. Separate penalty of Rs. 1000/- was imposed under Section 77 of the Act. The decision of the adjudicating authority was upheld by the Commissioner (Appeals) in an appeal filed by the assessee. The present appeal is directed against the appellate Commissioner's order. The stay application seeks waiver of pre-deposit and stay of recovery in respect of the outstanding dues determined by the adjudicating authority. We have allowed this application by granting waiver of pre-deposit so that the appeal could be taken up for final disposal with similar appeals of the assessee. Appeal No ST/954/2011: Show-cause notice dated 4.6.2008 demanded from the assessee service tax of Rs. 4,82,768/- which was allegedly short-paid on tour operator's service for the month of April 2007. This notice alleged that ....
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....x in 2006-2007, is recoverable from them. As the tax liability of the assessee for the year 2006-2007 is in issue in Appeal No. ST/138/2009, a decision on Appeal No. ST/954/2011 will necessarily depend on the results of Appeal No. ST/138/2009. The time-bar issue also arises in a few of these appeals. 3. The total period of dispute covered by all the appeals is 1.4.2000 to 31.3.2009. During this period, though the definition of 'tour' under Section 65 of the Finance Act, 1994 remained unchanged (tour means a journey from one place to another irrespective of the distance between such places), the definition of 'tour operator' was amended from time to time. Prior to 10.9.2004, 'tour operator' had the following definition: "Tour operator" means any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988 (59 of 1988) or the rules made thereunder". From 10.9.2004 to 15.5.2008, 'tour operator' stood defined thus: "tour operator" means any person engaged in the business of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightseeing or other similar servic....
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...., despite the fact that the motor boat or a cruise moves about in the same place. The crux of the definition is that the movement should take place by transporting a person from one place to another place as signified by the usage of the word "places" as the last word in a statutory definition of tour. The word "places" would signify that the originating point of the journey should be different from the destination or terminating point going round and round the mulberry bush or going round and round at Hussaini Sagar Lake at Hyderabad cannot be any fancy of imagination come within the scope of journey from one place to another place. This is because a person moves about in the same place on a sheet of water and originating and terminating points are the very same say - Lumbini park or Durgam Cheruvu or Mir Alam Tank or Nagarjuna Sagar or Vijaywada Durga Ghat or Nellore Lake. The person remains at the very same place and only surveys the place with his eyes and enjoys nature at the same place and spends time at the same place." On the above basis, it was contended that the TTD darshan ticket charges, RFC entry fees, hill transportation charges and waterfleet charges were not to be ....
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....e counsel. 4. The learned counsel also contended that the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 was not attracted in this case. It was claimed that all the relevant facts were within the knowledge of the department and therefore the allegation of suppression of facts was not sustainable. Such facts were gathered by the department through their auditors and officers who frequently/periodically visited the appellant's premises. In the circumstances, the allegation of suppression of facts was not tenable. In this context, the following decisions were relied on: a. Ugam Chand Bhandari v. CCE [2004(164) ELT 236 (SC)] b. Anand Nishikawa Co. Ltd. v. CCE [2005(188) ELT 149 (SC)] The first show-cause notice itself had been issued alleging the relevant facts. There was no change of facts for the subsequent period and, therefore, the allegation of suppression of facts raised in the subsequent periodical notices was untenable. In this connection, reliance was placed on the following decisions of the Supreme Court: a. Nizam Sugar Factory v. CCE [2006(197) ELT 465(SC)] b. Hyderabad Polymers ....
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.... supplementary services of arranging guide, monument visits, food, general assistance etc. were also covered by the definition of "tour operator's service.' On this basis, the learned JCDR submitted that all amounts collected by the assessee as train fare, TTD darshan fee, RFC entry fee, water fleet charges, etc. were liable to be included in the taxable value of 'tour operator's service.' Only on the gross taxable value could the assessee claim the benefit of abatement of 60% under Notification No. 39/97-ST. It was also pointed out that the assessee had availed and utilized inadmissible credit of Rs. 8,11,058/- being the amount of service tax paid on architectural and technical services used for construction of hotels, which were not input services with nexus to tour operator's service. In this connection, the JCDR referred to para 29 of order-in-original No. 26/08-ST. With regard to the demand of service tax of Rs. 4,82,768/- challenged in Appeal No. ST/954/2011, the learned JCDR agreed with the learned counsel that this appeal could be disposed of only on the basis of the outcome of appeal No. ST/138/2009. On the point of limitation, he reiterated the findings recorded in the re....
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.... as tour means a journey from one place to another, only the amount charged for such journey can be taken as the taxable value of tour operator's service. Any amount collected for local events such as sightseeing, boat cruising, visit to temple, visit to film city etc. In a particular place cannot be part of the taxable value of tour operator's service. In this connection, the learned counsel has relied on lexicon meaning of 'journey'. ADVANCED LAW LEXICON referred to by the counsel says that the term 'journey', as used in a statute forbidding the carrying of weapons except on a journey, should be construed in its popular sense, and includes a going from home by a highway to a definite point far enough distant to carry a person beyond the circle of his neighbours . . . . The lexicon further says that it is impossible to lay down any determinate distance which will characterise the act as a journey or the actor as a traveller. Much must depend on the circumstances of each particular case. In another context, the lexicon says that journey in its original signification meant a day's travel, but in use it has attained a broader though less definite meaning, and it is now applied to a t....
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....rrespective of the distance between such places. From 10-9-2004, the business of a tour operator includes arrangements for accommodating, sight-seeing or other similar services vide definition of 'tour operator' incorporated in para (3) of this order. In a tour as understood in common parlance, tourists, usually in groups, are taken by the tour operator by any mode of transport from one place to another and, en route or at the terminal place, local sight-seeing trips (including visits to zoo, museum, monuments and other historic spots etc.), visits to temples or other places of worship, boat cruising in lakes, trips to hill resorts, etc. are organized or facilitated for the tourists by the tour operator. In our view, such local events or trips organized or facilitated by the tour operator in any place covered by the tour are also to be considered as part of the tour as these were not casual occurrences but pre-planned and organized events which can reasonably be brought within the ambit of the expression "other similar services" by applying ejusdem generis principle. These supplementary services provided by the tour operator are also encompassed by the definition of the taxable ser....
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....arrangements for accommodation, sight seeing or similar services) by any mode of transport and includes any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under Motor Vehicle Act, 1988 or the Rules made thereunder. Since for this period, the definition of "tour operator" itself covers the activities like arranging accommodation, sightseeing or similar activities, for this period the supplementary services of guide services, monument visit services, porter services, food services, general assistance services etc. would be covered by the definition of tour operator and therefore the amount received by the Appellant for these activities from the PTOs would be liable to service tax. 3.1 As regards the period from 1-4-02 to 10-9-04 during this period while the definitions of "tour", "tourist vehicle" and "taxable service" in relation to tour was same as that during period from 10-9-04 onwards, the definition of "tour operator" during this period was as under :- "Tour operator means a person engaged in the business of operating tours in a tourist vehicle covered by permit granted under Motor Vehicles Act, 1988 or rules made thereunder....
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....kage tour. The services provided by such a tour operator may also include, apart from providing the basic service of transportation from one place to another, services of providing boarding and lodging arrangement, local sightseeing, guide services and wide range of other value added services provided by tour operators such as providing for porters, booking of accommodation, arranging the visit to amusement park, visit to the museum etc. Subsequently these instructions were reiterated by the Board vide Circular No. 11/1/2001-TRU, dated 9-7-2001. We are of the view that these circulars of the TRU have to be treated as contemporaneous exposition with regard to the scope of - 'Tour operator's service and therefore during period prior to 10-9-04 also, the supplementary services of arranging visits to monuments, arranging guides. providing food during the tours, general assistance to the tourist etc. were covered by the definition of tour operator and hence the same attracted service tax. 3.2 In view of the above discussion, throughout the period of dispute, the supplementary services of arranging guide services, monument visit services, porter services, food services, general assista....
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....on Kirkpatric and Rolex Logistics to argue that the amounts collected from the tourists towards TTD darshan tickets, RFC entry fee, water fleet charges etc. after defraying these expenses are in the nature of reimbursable expenses and hence liable to be excluded from the taxable value. The ratio of the cited decisions is of no aid to the appellant as it is based on what 'reimbursement' means in the context of determination of taxable value of a given taxable service. The following is an excerpt from Rolex Logistics: 5. ....... What is a reimbursement? When a service provider provides service to a service receiver or a client, on behalf of his client he incurs various expenditure and these expenditure are all for different purposes. The Service Tax liability in terms of Section 67 is only on the gross amount received towards the services rendered. If the service provider in the course of rendering service has to make certain payments on behalf of the service receiver, they are known as reimbursements. The reimbursements are actually not towards the service rendered but they are only towards other expenditure incurred on behalf of the client by the service provider. Normally, the se....
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....of their contention that in any case, TTD darshan, RFC visit etc. would not be part of package tour and expenses thereof cannot be included in the taxable value for any period prior to 23/08/2007. "Package tour" was defined identically in the explanations to Notification No.39/97-ST and Serial No.2 of Notification No.1/06-ST as shown below:- "The expression "package tour" means a tour in which the provisions for transportation and accommodation for stay of the person undertaking the tour has been afforded by the tour operator." The definition in Notification No. 1/06-ST was amended by Notification No. 38/07-ST dt. 23/08/2007 as follows:- "The expression "package tour" means a tour wherein transportation accommodation for stay, food, tourist guide, entry to monuments and other similar services in relation to tour are provided by the tour operator as part of the package tour to the person undertaking the tour." The basis of the aforesaid contention of the appellant is the absence of the words "other similar services" in the definition of 'package tour' prior to 23/08/2007. On the one hand, the above argument of the appellant is a tacit acknowledgment of the fact that the suppleme....
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....ect of package tour inasmuch as this Notification reads ".... ... hereby exempts taxable service (other than service in relation to a package tour) provided by a tour operator ....". The appellant is not eligible for exemption under Notification No.l5/07-ST dt. 04/04/2007 either as this benefit is also not applicable to operators of package tours. 15. Against the demand of service tax allegedly short-paid on mandap keeper's service, the learned Commissioner did not accept the assessee's plea for adjustment of the excess tax paid under tour operator's service towards the demand on mandap keeper's service. The reason stated by the Commissioner is that the assessee did not satisfy the conditions laid down under sub-rule (4B) of Rule 6 of the Service Tax Rules for effecting such adjustment under sub-rule (4A) vide Para 28 of the Commissioner's order. The appellant has submitted that this finding of the Commissioner is beyond the scope of the show-cause notice. In this connection, the appellant has also relied on a few decisions of the Supreme Court viz. Gujarat State Fertilizer Co. v. CCE [1997(91)ELT 3 (SC)]; SACI Allied Products Ltd v. CCE [2005 (183)ELT 225 (SC)] etc. The appellant....
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....re liable to be included In the gross taxable value before any abatement can be allowed under the relevant Notifications. 18. The adjudicating authority has ordered for recovery of an amount of Rs. 8,11,058/- from the assessee on the ground that CENVAT credit to this extent was irregularly availed by them on architect services and technical services used for construction of hotels and utilized the credit during the period from October 2004 to February 2006. The Commissioner held that the said services were not used for providing the output service (tourist operator's service) and hence not input services for the purpose of CENVAT credit. The Commissioner also invoked Rule 9(1) and Rule 9(2) to deny the credit to the assessee on the ground that the relevant invoice/bill did not indicate that the input service provider had paid tax on the service. The appellant has submitted that the reason stated by the Commissioner with reference to Rule 9 for denial of CENVAT credit on the aforesaid services is also beyond the scope of the show-cause notice. It is claimed that the denial of the benefit is contrary to the provisions of the CENVAT Credit Rules 2004. We have considered these submiss....
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....ice alleged that the collection of taxable amounts was not disclosed in the ST-3 returns filed for the period of dispute and that this crucial fact was suppressed wilfully. In their reply to the show-cause notice, the assessee submitted that the relevant facts were within the knowledge of the department as Indicated by allegations raised in the first show-cause notice which was issued for the period from 1/4/2000 to 31/3/2003. Therefore, It was not open to the department to allege in show-cause notice dated 11/1/2008 that the appellant had suppressed the same facts for a later period. In this connection, certain judgments of the Supreme Court were also relied on by the assessee. The adjudicating authority relied on the apex court's judgment in Coaltar Chemicals Manufacturing Co. v. UOI [2003(158)ELT 402 (SC)] and the Tribunal's decision In the case of Insurance and Provident Fund department v. CCE [2006(2)STR 369(Tri-Del)] to hold that there was adequate ground for invoking the extended period of limitation. Before this Tribunal, the assessee has supplemented judgments in a bid to establish that the extended period of limitation was not invocable as they being a Government company ....
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....t has also become amply clear to us that there was a difference of opinion between the appellant and the department during the material period, on interpretation of the statutory provisions relating to tour operator's service. Apparently, the appellant held the belief that they were not liable to include the aforesaid fees/charges in the gross taxable value for the purpose of claiming abatement under the relevant Notifications. In such circumstances, some of the cited decisions are supportive of the plea of limitation. In the case of Nizam Sugar Factory (supra), it was noticed by the Supreme Court that all relevant facts were in the knowledge of the Department when the first of a series of show-cause notices raising the same issue was issued to the assessee, and it was held that the allegation of suppression of facts by the assessee could not be raised in the subsequent show-cause notices. The apex court's judgments in the cases of P&B Pharmaceuticals (supra) and ECE Industries Ltd. (supra) are also to the effect that the extended period of limitation is not invocable in a show-cause notice on the ground of wilful suppression or misstatement of facts where the Department raised a s....
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.... proviso to Section 73(1) in the show-cause notice and for other reasons recorded hereinabove, the demand beyond the normal period of limitation is liable to be set aside. 22. In the absence of valid grounds for invocation of the proviso to Section 73(1) of the Finance Act, 1994, in this case, there can be no penalty on the appellant under Section 78 of the Act either. 23. Penalties imposed on the appellant under Section 76 of the Act are under challenge in some of these appeals. In one appeal, the penalty Imposed under Section 77 of the Act is also under challenge. We note that the question whether the benefit of Section 80 of the Act should be granted to the assessee was not considered by the lower authorities while imposing these penalties. In our view, the bona fide belief held by the appellant that they could claim abatement under the relevant Notifications on a taxable value without including therein the amounts collected from tourists for the supplementary services can be considered as a "reasonable cause" for their failure to pay the service tax demanded by the lower authorities inasmuch as they have demonstrated the belief to be bona fide. Therefore, the appellant can le....