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Whether the amendment in definition of “Tour Operator” u/s. 65(115) by Finance (No. 2) Act, 2004, enlarging its scope to include other supplementary services like ‘planning’, ‘scheduling’ etc. is only clarificatory and hence includible in value of taxable services provided prior to 10-09-2004 also? Held, Yes.
Facts: The Assessee, a tour operator, entered into a contract with various Principal Tour Operators (‘PTO’), for providing transportation services by tourist vehicle and paid service tax only on transportation charges received by claiming an exemption up to 60% of the gross amount charged vide Notification No. 39/97-ST for providing package tour. No service tax was paid on the supplementary services provided of Air and Railway Ticket booking, food and lodging, guide services etc. contending that these were incurred on behalf of the PTOs for which reimbursement was made on actual basis and that the definition of “Tour operator” including such services was amended with effect from 10-09-2004. The Tribunal upheld the levy of service tax holding that treating entire tour contract as a package proves that he was fully aware that in a package tour, supplementary services are also included. Hence, this appeal was filed.
Held:
From a combined reading of definitions of “taxable service” in 65(105)(n) and “tour operator” u/s. 65(115), it is clear that the former definition is wide and includes all the services rendered relating to tour. While determining the scope of taxable service, it was held that, the phrase “in relation to” the tour means “in the aid of tour” also. Circular No. F.B.43/10/97-TRU, dated 22-08-1997 also clarifies that the value shall be the gross amount charged for services in relation to a tour and includes any supplementary services provided in relation thereto. The said clarification was reiterated by the Board in the years 2001 and 2007. The High Court therefore held that, the amendment in the definition is only clarificatory.
Further, since u/s. 67 the reimbursement does not fall within the purview of exclusion clauses, being a part of the gross amount, they are to be treated as value of taxable service.
