By TIOL News Service

MUMBAI, OCT 29,2015: THE appellant is engaged in operating airlines and also providing various other taxable services. During the period September 2004 to January 2006 the appellant entered into a contract with hotels and were offering package tours to their customers who booked flight 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".

The lower authorities confirmed the ST demand and imposed penalties and, therefore, the airline is before the CESTAT.

The appellant submitted that they had advertised a scheme on their website called "Jet Escape" and wherein they offered a particular package to their customers and the customers could take the offer and decide when they would like to travel and accordingly book the tickets; that the entire "Jet Escapes" package was modeled to increase their revenue and in the form of sale of flight tickets; that the passenger is given the facilities of transportation, stay and sight seeing as package tour; that 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. Inasmuch as since they are not in the business of planning, scheduling, organizing or arranging tours, it cannot be said that they are conducting 'Tour Operator Service'. Reliance is placed on the decisions in Divisional Controller - 2013-TIOL-1769-CESTAT-MUM & T.N.State Trans. Corpn.,Kumbakonam Ltd. - 2009-TIOL-623-CESTAT-MAD. It is also pleaded that the demand was time barred as Audit was conducted during the period involved.

The AR submitted that the hotel bookings and accommodation for "Jet Escapes" package is provided through agents appointed by the appellant; that the appellant through their office or through its agents help their customers to plan and schedule their holiday to a specific destination; that the appellant's activity either directly or indirectly definitely includes planning, scheduling, organizing or arranging tour for their customers; agreement entered into by appellant with Indian Hotels Co. Ltd. clearly indicates that it is the appellant who has entered into contract with the Hotels Group for the arrangement of sight seeing or transport etc. for the passengers in terms of agreement. Reliance is placed on the decision in Cox & Kings - 2013-TIOL-1907-CESTAT-DEL in support.

The Bench after considering the submissions inter alia observed -

++ Appellant is operating "airlines" which undertakes transport of passengers by air. In order to enhance their business of selling airlines 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 seeing 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 want to opt for "Jet Escapes Package", organize own travel dates and appellant is not helping them in planning or organizing or scheduling of tours.

The Bench further observed that in the case of Divisional Controller it is held that tour operator service means the person should be engaged in the business of planning, scheduling or arranging the tours and in the absence of any such activity undertaken, the services cannot be considered as tour operator service and taxed. Moreover, the same view was echoed in the case of T.N. State Trans. Corpn. Kumbakonam Ltd., the Bench noted.

After distinguishing the Tribunal decision in Cox & Kings relied upon by the AR as being delivered on a different set of facts, the Bench concluded that since the appellant had not planned, scheduled or organized the tours for their passengers, they would not be covered under the category of 'Tour Operator Service'.

The impugned order was held to be unsustainable and set aside.

The appeal was allowed.

(See 2015-TIOL-2317-CESTAT-MUM)