AI Drafter 
TaxTMI 
TaxTMI 
2019 (8) TMI 90
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....39;) services to B2B Agents i.e. other travel agents & tour operators (B2B Clients). The applicant does online booking of Hotel Rooms from the Hotel Aggregators as per its client's requirements & makes payments for the same on behalf of the B2B Clients. 3. These can be summarized as follows: i. The applicant entered into contract with different Hotel Aggregators (Suppliers). ii. The applicant also entered into contract with B2B Agents (Customers) / B2C to provide Hotel booking services. iii. The applicant provides Hotel booking services to B2B Agents / B2C and acts as their Pure Agent. iv. The applicant raises bills on B2B Agents / B2C showing Hotel Cost & its Commission / Fee separately in the invoice and charge GST @ 18% only on its Commission / Fee component. v. The Hotel Aggregators raise consolidated bill in the name of applicant mentioning the respective name of B2B Agent / B2C who used these Hotel services. vi. The applicant does not use for its own interest hotel services so procured. 4. A view suggested by some consultants that 'Accommodation Only' Services are not covered under the above entry of 'Tou....
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..... It receives only the actual amount incurred to procure the hotel services, in addition to the amount received for the services it provides on its account. Question No. 2: 11. Is there any option available to a 'Tour Operator' to either charge GST@ 5% (with no ITC) or charge GST @ 18% (with full ITC) Views of the Applicant: Question No. 1: 'Accommodation Only' services: 12. The applicant satisfies the above stated conditions of Pure Agent, accordingly, it should charge GST@ 18% on only its Service Fees / Convenience Fee. Question No. 2: 'Tour Operators' services: 13. Based on the interpretation of the notification prescribing GST rates for Tour Operators, an option of charging either GST@ 5% (with no ITC) or GST @ 18% (with full ITC) should be available to the applicant in order to pass on the free flow of GST input benefit to its customers. 14. The applicant would be providing an online platform for providing facilitation services for helping passengers / end customers (B2B / B2C clients) to make travel bookings. The applicant will collect its service fee in addition to the hotel accommodation charged by the overseas vendor/ hotel from the end cust....
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....lating the supplier Hotel bill. Relevant Classification of Services: S. No. Chapter, Section, Heading or Group Service Code (Tariff) Service Description (1) (2) (3) (4) 400 9985 Support Services 435 Group 99855 Travel arrangement, tour operator and related services 436 998551 Reservation services for transportation 437 998552 Reservation services for accommodation, cruises and package tours 438 998553 Reservation services for convention centres, congress centres and exhibition halls 439 998554 Reservation services for event tickets, cinema halls, entertainment and recreational services and other reservation services 440 998555 Tour operator services 441 998556 Tourist guide services 442 998557 Tourism promotion and visitor information services 443 998559 Other travel arrangement and related services nowhere else Classified RELEVANT NOTIFICATIONS: 22. Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017: In exercise of the powers conferred by sub-secti....
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....y person engaged in the business of 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. 2.5 1. Provided that credit of input tax charged on goods and services used in supplying the service other than the input tax credit of input service in the same line of business (i.e. tour operator service procured from another tour operator), has not been taken [Please refer to Explanation no. (iv)] 2. The bill issued for supply of this service indicates that it is inclusive of charges of accommodation and transportation required for such a tour and the amount charged in the bill is the gross amount Charged for such a tour including the charges of accommodation and transportation required for such a tour. (ii) Services by way of house-keeping, such as plumbing, carpentering, etc. where the person supplying such service through electronic commerce operator is not liable for registration under sub-section (1) of section 22 of the Central Goods and Services Tax Act, 2017. 2.5 Provided that credit of ....
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....rs. DOTW is not a travel agent, nor is it acting as a travel agent. iii. The contract for the sale of Travel Components by DOTW is solely with the applicant. The DOTW do not contract for the onward or forward sale of the Travel Components to the Customer, directly or indirectly. A Customer purchasing Travel Components is contracting directly with the applicant, therefore, the onward sale of Travel Components is solely the responsibility of the applicant. 29. Under the above agreement, the applicant is booking hotel rooms in foreign countries for its Indian clients. The applicant is also required to collect payment for the hotel accommodation services from its clients for onward remittance to DOTW. 30. The applicant has claimed that they are receiving the following amounts during the supply of such services: i. The cost of Hotel Accommodation, which is paid by the Indian clients to the applicant in Indian Rupees. The applicant has claimed that they are sending the said amount in foreign exchange to the foreign Hotel Aggregator and are acting as their pure agent. They have claimed that this amount is not liable to the payment of GST. ii. Service Fee /....
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....39;Accommodation only' Services, the applicant is acting as a "pure agent" in respect of amount received for hotel room, while supplying the main taxable service of booking of hotel rooms, for which it gets service fee / convenience fee from Indian B2B or B2C clients iii. In such cases whether GST @ 18% on the total price (including the hotel cost) is payable or GST @ 18% only on the service / convenience fee (by excluding the hotel cost) is payable, i.e. whether the applicant is liable to pay GST on the total amount paid by the clients (including cost of Hotel Accommodation) or only on the Service fee / convenience fee received by them. iv. Whether any option is available under S. No. 23 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 to the 'Tour operators' to either pay GST @ 5% (with no ITC) or to pay GST @ (with full ITC). In Other words whether it is permitted to a tour operator who is able to satisfy condition no. 2 given in column (5) of S. No. 23 of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 but is willing to pay GST @ 18% so as to take the benefit of ITC. Question No. l: 33. As far as the first ....
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....ng services on behalf of another, it is; held that the applicant can be called "Supplier" under Section 2(105) of the CGST Act, 2017, in relation to the supply of Hotel Accommodation Service supplied by the foreign Hotel or Hotel Aggregator, 40. Under section 9 of the CGST Act, 2017. GST is payable by the taxable person on the transaction value of supply of goods or services, except in the situations covered in section 9(3) and 9(4) of the Act where the receiver of the supply of goods or services is liable to pay tax. 9. Levy and collection. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intro-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under Section 15 and at such rates, not exceeding twenty per cent, as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. **** (3) The Government may, on the recommendations of the Council, by notification, specify categories of supply ....
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.... 22 and Clause (vii) of Section 24 of the CGST Act, 2017, the applicant is compulsorily required to be registered while acting as an agent for supply of services. 46. Hence, the applicant can be called 'taxable person' as per Section 2(107) of the CGST Act, 2017. 47. From the combined reading of Sections 2(5), 2(105), 2(107), 22 and 24 of the CGST Act, 2017, it is clear that the applicant is covered in the definitions of "Agent", "Supplier" and "Taxable Person". Further, the applicant is falling under the categories of persons under Section 22 and also under Section 24 requiring compulsory registration while booking Hotel Accommodation in foreign countries for its clients in India. 48. The second issue for decision is whether the applicant is acting as a "pure agent" in respect of amount received by them from the clients which is remitted by the applicant to the foreign Hotel Aggregators. 49. Section 15 of the CGST Act, 2017 read as follows: (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipien....
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....pure agent" means a person who- (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply; (c) does not use for his own interest such goods or services so procured; and (d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account. Illustration.- Corporate services firm A is engaged to handle the legal work pertaining to the incorporation of Company B. Other than its service fees, A also recovers from B, registration fee and approval fee for the name of the company paid to the Registrar of Companies. The fees charged by the Registrar of Companies for the registration and approval of the name are compulsorily levied on B. A is merely acting as a pure agent in the payment of those fees. Therefore, A's recovery of such expenses is a disbursement and not part of the value of supply ma....
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.... b) neither intends to hold nor holds any title to the goods or services or both, so procured or provided as pure agent of the recipient of supply; c) does not use for his own interest such goods or services so procured; and d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account. The important thing to note is that a pure agent does not use the goods or services so procured for his own interest and this fact has to be determined from the terms of the contract. In the illustration of importer and Customs Broker given above, assuming that the Contract was for clearance of goods and delivery to the importer at the price agreed upon in the contract. In such case, the Customs Broker would be using the transport service for his own Interest (as the agreement requires him to deliver the goods at the importers place) and thus would not be considered as a pure agent for the services of transport procured. Another important fact is that, the person who provides any service as a pure agent receives only the actual amount for the services provided. Coming....
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.... • A is merely acting as a pure agent in the payment of those fees. • Therefore, A's recovery of such expenses is a reimbursement and not part of the value of supply made by A to B. Same examples of pure agent are: 1. Port fees, Port charges, Custom duty, dock dues, transport charges etc. paid by Customs Broker on behalf of owner of goods. 2. Expenses incurred by C & F agent and reimbursed by principal such as freight, godown charges Illustration: Suppose a Customs Broker issues on invoice for reimbursement of a few expenses and for consideration towards agency service rendered to an importer. The amounts charged by the Customs Broker are as below: S.No. Component Charged in Invoice Amount 1 Agency Income Rs. 10,000/- 2 Travelling expenses; Hotel expenses Rs. 15,000/- 3 Customs Duty Rs. 55,000/- 4 Docks Dues Rs. 5000/- In the above situation, agency income and travelling/ hotel expenses shall be added for determining the value of supply by the Customs Broker whereas Docks dues and the Customs Duty Shall not be added to the value provided the conditions of p....
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....tion of supplier of services and the location of the recipient of services is in India. (2) The place of supply of services, except the services specified in sub-sections (3) to (14),- (a) made to a registered person shall be the location of such person; Before 25.01.2018: 59. It is observed that under S. No. 23 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, only those services which are not covered in entry (i) of Column (3) are covered in entry (ii) @ 9% CGST (with full ITC). Hence, services covered in entry (i) of column (3) i.e. 'Tour Operators Services' are not covered in entry (ii). From 25.01.2018: 60. Similarly, it is observed that under S. No. 23 Of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, only those Services which are not covered in entry (i) of column (3) are covered in entry (iii) @ 9% CGST (with full ITC). Hence, services covered in entry (i) of column (3) i.e. 'Tour Operators Services' are not covered in entry (iii). 61. The applicant has contended that they as a tour operator have an option to avail the ITC provided they pay GST @ 18% (9% CGST + 9% SGST). However, the view of the appl....