Case Law Details
Hi Tour Mamallapuram Private Limited Vs Commissioner of GST & Central Excise (CESTAT Chennai)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai allowed the appeal filed by a tour operator against service tax demands relating to air ticket and train ticket booking charges. The Department had alleged that during April 2013 to March 2014, the appellant booked air tickets for customers and paid service tax on a value lower than the invoice value. A show cause notice was issued demanding differential service tax, interest, and penalty under Section 76 of the Finance Act, 1994. The Adjudicating Authority confirmed the demand and penalty, and the Commissioner (Appeals) upheld the order.
Before the Tribunal, the appellant argued that there is a separate taxable category for “Air Travel Agent” service and that mere booking of air tickets could not be taxed as “Tour Operator” service. It was submitted that the appellant obtained tickets from air travel agents at discounted prices and sold them to customers at original prices, retaining the discount to meet administrative expenses. According to the appellant, this activity amounted to trading, which was outside the scope of service tax.
The appellant also relied on earlier Tribunal decisions passed in its own case for previous periods. The Tribunal noted that in prior orders, it had already held that mere trading in air tickets without additional tour-related activities did not attract service tax under “Tour Operator” service. It was also noted that the appellant was not a member or agent of IATA and that the Revenue had not alleged receipt of commission from airlines or IATA. The Tribunal observed that the definition of “Tour Operator” service involved a range of activities and there was nothing to show that mere trading in air tickets by itself attracted service tax.
The Tribunal further observed that the Revenue had not shown that the earlier order in the appellant’s own case had been overturned or had not attained finality. Since the nature of the transactions remained the same and there was no evidence that the present transactions were different, the Tribunal followed the earlier decisions and set aside the impugned order. The appeal was accordingly allowed with consequential reliefs.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Hi Tour Mamallapuram Pvt Ltd, the Appellant herein, assails the Order in Appeal No.169/2017 (CXA-II) dated 24.03.2017 (impugned order) passed by the Appellate Authority, whereby the Appellant’s appeal against the Order in Original No.11/2016-ST dated 26-02-2016 passed by the Adjudicating Authority was rejected.
2. The relevant facts are that the Appellant is registered as a ‘Tour Operator’ service provider. During the verification of the Appellant’s records, Department observed that for the period April 2013 to March 2014, the appellant had booked Air Tickets for their clients by raising invoices shown as ‘Sale of Air Tickets’. The Department, being of the view that booking Air Tickets on behalf of their customers is a taxable service, and noticing that the value adopted by the Appellant for paying service tax is at variance with the invoice value, issued an SCN dated 07.04.2015 demanding short paid service tax along with appropriate interest and proposing imposition of penalty under section 76 of the Finance Act, 1994. After due process of law, the Adjudicating Authority confirmed the demand as well as imposed penalty as proposed. Aggrieved, the Appellant preferred an appeal before the Commissioner of Central Excise (Appeals-II). However, vide the impugned order, the Appellate Authority upheld the order of the Adjudicator. Hence this Appeal.
3. Shri. Harihara Kumar, Ld. Consultant, appearing for the Appellant contended that there is an independent heading to levy service tax on ‘Air Travel Agent’ and that being the case, mere booking of air ticket or arranging tour by flight cannot be brough under Tour Operator service. It was contended that they are not arranging any tour by air or rail or sea and where the tour packages included air ticketing, they had obtained the ticket from the air travel agent at a discounted price and had charged the passenger the original ticket price and thereby retained the discount at the same rate to meet their administrative expenses and this is nothing but trading which is outside the purview of the service tax.
4. Ld. Consultant submitted that the issue involved in the present dispute is already settled in the Appellant’s own case for the earlier periods by this Tribunal and produced the Final Order No.40485/2025 dated 02.05.2025, passed by this Bench of the Tribunal in the Appellant’s Service Tax Appeal No.41128 of 2016 against the Order in Appeal No.77/2016 (CXA-II) dated 29.02.2016.
5. Smt. Anandalakshmi Ganeshram, Ld. Authorised Representative reiterated the findings of the Appellate Authority in the impugned order.
6. Heard both sides, and perused the material on record.
7. The only issue that arises for our consideration is whether the Appellant is liable to include the value of air tickets / train tickets charges in the taxable value of Tour Operator Service that is being rendered by the Appellant.
8. We find that in the Appellant’s own case, this Tribunal, vide its Final Order No.40485/2025 dated 02.05.2025 has held in favour of the appellant. Relevant portions of the order are reproduced below:
“5. The main issue that is to be decided in this appeal is whether the Appellant is liable to include the value of air tickets / train tickets charges in the taxable value of Tour Operator Service?
6. We find that the issue involved in the present appeal has already been covered by the decision of the Tribunal Chennai in the Appellant’s own case vide F.O. No. 40738/2023 dated 31.08.2023 which reads as below: –
“7. It is the case of the appellant that the dispute pertains to the trading air tickets as bought from travel agents and sold to the customers, with or without profit, and same did not include any other activities other than mere selling of or trading in such air tickets. It is an admitted fact on record that insofar as the other activities are concerned, the appellant has admitted and paid applicable Service Tax. It is also an undisputed fact that the appellant is not a member or agent of IATA and that it is not the case of the Revenue that the appellant had earned any commission from IATA or any other airlines when it sold or traded in air tickets. Moreover, from the definition of tour operator service, we find that the same involves a gamut of activities and there is nothing to suggest that trading in air tickets per se invited Service Tax.
8. In view of the above, we hold that the demand of Service Tax on the consideration and for booking of tickets in respect of domestic travel is not a taxable event and hence, to this extent, the direction of the Commissioner (Appeals) cannot sustain. Consequently, we set aside this part of the impugned order, by holding that the appellant is not liable to pay Service Tax on the mark-up or margin earned for booking tickets with regard to domestic travels.
9. The appeal, therefore, is allowed with consequential benefits, if any, as per law.”
7. Appreciating the applicability of the ratio of the above decision, we are of the opinion that demand cannot sustain. The impugned Ordering-Appeal No. 77/2016 (CXA-II) dated 29.02.2016 is ordered to be set aside.
8. Thus, the appeal is allowed with consequential relief, if any, as per the law.”
9. Revenue has not shown to us that the aforesaid Final Order No.40485/2025 dated 02.05.2025 in the appellant’s own case, has not attained finality. Therefore, when the lis, regarding the nature of the particular transaction and its eligibility to service tax inter se the parties, has attained finality and all the more when there is no allegation or evidence that the present transactions are of a different nature, that forms yet another compelling reason to decide the present dispute in the Appellant’s favour.
10. For the aforesaid reasons, respectfully following the decision of the coordinate bench noticed above, we set aside the impugned order.
The Appeal is allowed with consequential relief(s) in law, if any.
(Order pronounced in the open court on 07.05.2026)
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