Custom, Excise & Service Tax Tribunal
Jet Airways (India) Ltd vs Commissioner Of Service Tax on 30 September, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT No. I Appeal No. ST/375/11 (Arising out of Order-in-Appeal No. M-I/AV/102/2011 dated 18.02.2011 passed by Commissioner of Central Excise, Mumbai I) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) ================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
Jet Airways (India) Ltd.
Appellant Vs. Commissioner of Service Tax Mumbai I Respondent Appearance:
Shri J.H. Motwani, Advocate with Ms. Divya Jaswant, Advocate for appellant Shri S.R. Nair, E.O. (AR) for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) Date of Hearing: 30.09.2015 Date of Decision: .
ORDER NO Per: M.V. Ravindran This appeal is directed against order-in-appeal No. M-I/AV/102/2011 dated 18.02.2011.
2. Filtering out the unnecessary details, the facts of the case are appellant is engaged in operating airlines and also various other taxable services. During the period in question i.e. September 2004 to January 2006 appellant entered into a contract with hotels and were offering package tours to their customers who booked the tickets. It is the case of the Revenue that appellant is liable to discharge the service tax liability under the category of tours and Travels service as a tour operator services as defined under Section 65(105)(r) of the Finance Act, 1994 and Section 65 (19) of the said Act. Show-cause notice was issued for the demand of service tax with interest and for imposition of penalty. Appellant contested the show-cause notice on merits as well as on limitation. The adjudicating authority after following due process of law, rejected the contentions raised and confirmed the demands with interest and also imposed penalties. On an appeal, the first appellate authority also rejected the contentions raised by the appellant before her and upheld the order-in-original in its totality.
3. Learned Counsel would take us through the entire case records and the agreement entered by them with one of the hotels. He would also take us through the advertisement placed by the appellant on their website as to the functioning of the Jet Escapes packages. It is his submission that appellant is not conducting any tour operator service, in as much they are not in the business of planning, scheduling, organizing or arranging tours. It is his submission that they offer a particular package to their customers and the customers take the offer and decide when they would like to travel and accordingly book the tickets. He would submit that in order to get cover under tour operator services the service provider has to plan, organize, schedule and arrange the tours. It is his submission that the entire Jet Escapes package was modeled to increase their revenue and in the form of sale of flight tickets to their customers. It is his submission that the passenger is given the facilities of transportation, stay and sight seeing as package tour. Appellant discharged the hotel bills etc. directly though the hotel booking accommodation is not done by the appellant but through the agents appointed for this purpose. He would then submit that somewhat similar issue had cropped up before the Bench in the case of Divisional Controller - 2014 (33) STR 168 (Tri. Mum), and T.N. State Trans. Corpn., Kumbakonam Ltd. 2009 (14) STR 760 (Tri. Chennai) wherein the definition and the requirement of the service provider to get cover under tour operator service has been explained by the Bench. It is his submission that by that explanation, the activity undertaken by the appellant would not fall under the category of package tours. He would also submit that during the period in question, the appellants records were audited by the department auditors and vide Audit Report dated 26.03.2009, the auditor had raised various other discrepancies in the records but never raised any objection as to the activity of the Jet Escapes package would fall under the category of tour operator services. He produced a copy of the said audit report and submitted that the entire records of the appellant for the period 2003-04 and 2007-08 was audited hence the demand for the period beyond one year as demanded in the show-cause notice is hit by limitation.
4. Learned D.R. on the other hand draws our attention to the findings recorded by the first appellate authority. It is his submission that the hotel bookings and accommodation for Jet Escapes package is provided through agents appointed by the appellant. It is his submission that the appellant through their office or through its agents help their customers to plan and schedule their holiday to a specific destination and it would fall under the definition of tour operator services, which covers the activity of planning, scheduling, organizing or arranging tours. It is also his submission that the appellants activity either directly or indirectly definitely includes planning, scheduling, organizing or arranging tour to their customers. He would submit that appellant themselves had submitted that the copy of the agreement entered into by them with Indian Hotels Co. Ltd. which clearly indicates that it is the appellant who was entered into contract with the Hotels Group for the arrangement of sight seeing or transport etc. for the passengers in terms of agreement. He would submit that the judgement of the Tribunal in the case of Cox and Kings 2014 (35) STR 817 (Tri. Del) clearly brings out the activity of the tour operator services and the current appellants activities gets covered under the category of tour operator services.
5. We have considered the submissions made by both sides and perused the records.
6. The issue involved in this case is whether the activity undertaken by the appellant would get covered as taxable service provided under tour operator service. Undisputed fact is that appellant is offering Jet Escapes Package to their various passengers who visit their website for booking air travel service offered by them. It is also undisputed that the appellant has entered into a contract with Hotels Chains for accommodating their passengers who have opted for Jet Escapes Package. On the factual matrix as stated above we require to look into the definition of tour operator service as given under Section 65(115) of the Finance Act, 1994. We reproduce the Section cited above.
Tour Operator means any person engaged in the business of planning, scheduling, organising or 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 in a tourist vehicle or a contract carriage by whatever name called, covered by a permit, other than a stage carriage permit, granted under the Motor Vehicles Act, 1988 (59 of 1988) or the rules made thereunder;
6.1 It can be seen from the above reproduced definition that the said definition would cover a person who is engaged in the business of planning, scheduling, organizing or arranging tours and who is engaged in the business of operating tours in tourist vehicle or a contract carriage. As already produced herein above, appellant is operating airlines which undertakes transportation of passengers by air. In order to enhance their business of selling airline tickets, appellant had offered Jet Escapes Packages to their passengers for a specified destination. On perusal of Jet Escapes Package details as downloaded from website, we find that the said advertisement specifically states that Return air travel in Economy class, inclusive of taxes, Airport transfers, Hotel accommodation with breakfast, sight seeking as applicable but does not indicate that they would plan, schedule or organize the tours for the passengers. Further the definition also mandates for the services to be rendered by persons engaged in business of operating tours in a tourist vehicle or a contract carriage. It is on record that the passengers when they wants to opt for Jet Escapes Package, organize own travel dates and appellant is not helping them in planning or organizing or scheduling of tours. We find that though not on the very same issue, this Bench in the case of Divisional Controller (supra) was considering the services rendered by the appellant therein as to whether this service would fall under the category of tour operator services. The appellant in that case was providing contract carriage and stage carriage to various individuals/customers and it was considered as the said service would fall under the category of tour operator service. The Bench after considering the definition as was during the relevant period held as under:-
6.1 We have considered the rival submissions. Undisputedly the period involved in this case is from 01.04.2001 to 31.3.2008. The definitions of Tour Operators at the relevant period are reproduced hereunder for convenience of reference.
(i) the position from 1.04.2000 to 9.9.2004 any person engaged in the business of operating tour in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988.
(ii) the position from 10.09.2004 onwards : persons who are engaged in the business of planning, scheduling, organizing or arranging tours by any mode of transport and includes any person engaged in the business of operating tours in a tourist vehicle. 6.2 From the records we find that the assesses are only renting their vehicles. We also find that the department could not bring out on record that the assesses are engaged in the business of planning, scheduling, organizing or arranging tours. In these circumstances, the assesses cannot be termed as tour operators. Therefore, the demands of Service Tax against them are not sustainable in law. As the demands are not sustainable, the penalties also do not survive. In these circumstances, the assesses appeals are allowed and the Revenues appeals are dismissed. 6.2 The above said ratio as to that tour operator service means the person should be engaged in the business of planning, scheduling or arranging the tours. In the absence of any such activity undertaken, the services cannot be considered as tour operator service and liable to be taxed. The same view is echoed by the Tribunal in the case of T.N. State Trans. Corpn. Kumbakonam Ltd. (supra) wherein the Bench held as under:-
4.?I have carefully considered facts of the case and the rival submissions. The impugned demand was issued in the wake of amendment to the scope of the levy under the category tour operator vide Finance Act, 2004. Prior to the amendment introduced in the Finance Act, 2004, the levy covered tours operated using tourist vehicles as defined in Section 2(43) of the Motor Vehicles Act and the rules made thereunder. This position was clarified by the Honble High Court of Madras in the case of Secretary, Federation of Bus Operators Association of Tamil Nadu v. UOI (supra). However, w.e.f. 10-9-2004, the scope of the levy was expanded to include tours operated by any person engaged in the business of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport. The clarification issued by the Board on budget changes relating to tour operator service reads as follows :-
20.?Extension of tour operator service to package tour operators using different modes of transport :
At present, tour operator service covers package tour operators also. However, under the present definition, such package tours attract service tax only if such tours involve modes of transport other than road (say a combination of air-rail-cab travel). The definition of tour operator has been suitably expanded. While the existing levy on tour operators engaged in operating tours in tourist vehicles remains as such, in case of a package tour (which are planned, scheduled, organized or arranged by tour operators), the scope of the levy is being extended by removing the limitation regarding transportation by tourist vehicles only. Such tourist operators would be subjected to service tax irrespective of the mode of transport used during such tours. The abatements (Notification No. 39/97-S.T.) in case of package tour operators (providing transportation and accommodation) would remain at 60%. 6.3 The learned department representatives reliance on the judgement of the Tribunal in the case of Cox and Kings (supra), we find that the said judgement may not take the Revenues case any further in as much the issue involved in that case was an outbound tours i.e. tours emanating from India and being sight seeking tours to various countries beyond India would fall under the category of tour operators service and would be considered as not taxable as they are consumed beyond the territory of India. We find the facts in that case was totally different but the Bench had recorded that planning, scheduling and organizing tours are not taxable services is also irrelevant. In the case in hand as we have recorded above the appellant herein has not planned, scheduled or organized tours for their passengers. In our considered view the ratio of this Tribunals judgement in the case of T.N. State Trans. Corpn. Kumbakonam Ltd. (supra) will be applicable in the case in hand and we have to hold that the appellant is not covered under the category of tours operator service.
6.4 Since we have disposed of the appeal on merits we have not recording any findings on the points of limitation urged before us.
6.5 In view of the foregoing and in the facts and circumstances of this case we hold that the impugned order is unsustainable and liable to be set aside and we do so.
7. Impugned order is set aside and the appeal is allowed.
(Pronounced in Court on.) (C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial) nsk ??
??
??
??
1 11Appeal No. ST/375/11