CENTRAL EXCISE COMMISSIONERATE-I: NEW DELHI
C.No. CE-20 / 41 / ST /Trade Notice 97
TRADE NOTICE No. 71 CE (Service Tax) / 97
Sub: Imposition of Service Tax on Tour Operators – reg.
Attention of the Trade is invited to this Office Trade Notice No. 67 to 70 CE (Service Tax) / 97 dated 29.8.97 through which it has been informed about the imposition of Service Tax on the services rendered by Tour Operators w.e.f. 1st September, 1997 in terms of Notification 37 / 97 to 40 / 97-ST dated 22.8.97 – Govt. of India, Ministry of Finance, Department of Revenue.
2. It is felt that some clarifications in respect of these two services given below for guidance of Public / Trade would be beneficial.
3.1 As per section 88 of the Finance Act, 1997, ‘tour operators’ means a person who holds a tourist permit granted under the rules made under the Motor Vehicles Act, 1988 and tour means a journey from one place to another irrespective of the distance between such places and the taxable service means any service provided to any person by a tour operator in relation to a tour the rate of service tax is 5% and the value of taxable service in relation to the service provided by a tour operator to a client, shall be the gross amount charged by such operator from the client for services in relation to a tour and includes the charges for any accommodation, food or any includes the charges for any accommodation, food or any other facilities provided in relation to such tour.
3.2 As per rule 82 of the General Motor Vehicle Rules, 1989 a tourist permit is granted only a tourist vehicle. As per the Motor Vehicles Act, Section 2 (43) a tourist vehicle means a contract carriage constructed or adapted and equipped and maintained in accordance with such specifications as may be prescribed. The term tour operators covers any person who holds a tourist permit in respect of any vehicle. The service tax on tour operators is on operators who run / operate a tour on a motor vehicle provided that the tour operator holds a tourist permit under the Motor Vehicles Act, 1988 in respect of any motor vehicle. Service tax will be chargeable on all domestic and inbound tourist service provided by a tour operator holding a tourist permit. Service tax will also be chargeable on journeys / tours undertaken by tourist taxis and tourist buses (which also hold tourist permits) within and outside the State where they have been registered as tourist vehicles.
3.3 The tour operator can be a self-employed, single vehicle owner individual or a well organised firm providing a vast range of professional service in the field of tourism whether organized as a sole proprietorship / partnership a private or a public limited company. Even public sector undertaking operating tours, such as Indian Tourism Development Corporation, Delhi Tourism Development Corporation etc. are covered under this levy. However State Roadways Corporations who ply passengers in the neighboring State, will not be covered by the levy as they do not require a tourist permit but operate on the strength of agreements between the concerned State authorities.
3.4 The services rendered by the tour operator may be only for providing transport service within or outside the town, city or states territorial limits. The services rendered by the tour operators may only be limited to providing transport service in relation to a tour or it may also include host of other services as in case of a package tour. The services provided by such a tour operator may also include, apart from providing the basic service of transportation from one place to another, services of providing boarding and lodging arrangements, local sight-seeing and guide services and a wide range of other value added services provided by the tour operators such as providing for porters, booking of arranging accommodation, reservation for entertainment / amusement parks, theatres and museums, providing / health and baby sitting services etc.
3.5 The service tax on services rendered by tour operators in relation to a tour shall be the gross amount charged by such operator from the client and shall include the charges for other services provided such as accommodation, food and other facilities in relation to such tour. In other words, it will be on the gross amount charged to the customer. However, in cases where the tour operator provides a package tour i.e. which necessarily includes accommodation for stay and may also include other facilities such as food, guide services etc., an abatement of 60% of the total amount charged may be given for the purposes of the services tax provided that the bill issued for this purpose clearly indicates that it is inclusive of such charges. In other words, services as provided that the bill issued for this purpose clearly indicates that it is inclusive of such charges. In other words, service tax would be leviable of 40% of the total amount charged in cases where the tour operator provides a package tour and the price of which mandatory includes charges for accommodation for stay provided during the course of the tour (Notification No. 39 / 97 – ST refers). Further an abatement of 90% from the gross amount charged to the client has been provided where the tour operator provides the services solely of booking or arranging accommodation and the bill issued for this purpose includes cost of such accommodation (Notification No. 40 / 97-ST refers). However, this abatement will not be allowed in case the bill issued does not include the cost of such accommodation.
3.6 Service tax on services rendered by tour operators is only on services rendered in India in respect of a tour within Indian territory. Services rendered by tour operators in respect of out-bound tourism i.e. for tours abroad, do not attract service tax. In case of a composite tour which combines tour within India and also outside India, service tax will be leviable only on services rendered for tours within India provided separate billing has been done by the tour operator for services provided in respect of tours within India.
4.1 As per section 69 of the Finance Act, 1994 read with rules 3 & 4 of the Service Tax Rules, 1994, every person responsible for collecting the service tax is required to be registered with the concerned Central Excise Officer appointed under Rule 3 Notification No. 38 / 97-ST, dated 22.8.97 amends Rule 2 of the said rules so as to prescribe that the person responsible for collecting the service tax in relation to the services provided by tour operators shall be the operator who raises the bill for services rendered to any person by such operator.
4.2 Rules relating to service tax on other services have already been notified and the trade is advised to go through them. However, for the benefit of the services which are to be covered by the Notify. No. 37 / 97/ to 40 / 97-ST Service Tax dt. 22.8.1997, the procedures to be followed for Registration, maintenance of documents, filing of returns and the manner in which the service tax is to be paid and which are contained in Chapter V of the Finance Act, 1994, notified to the trade vide this Commissionerate Trade Notice No. 46-CE(Misc.46) / 94 dt. 7.7.1994 are reproduced along with annexures as amended form time to time and by the Finance Act, 1997.
4.3 The assessees will apply for registration in from ST-1 (Annexure-I). An acknowledgement will be provided on the duplicate copy of the ST-1 form by the Superintendent of Central Excise (Service Tax) in Room No. 254, CR Building, I.P. Estate, New Delhi. Registration No. will be allotted on receipt of their application.
4.4 Payment of Service Tax
Rule 6 of the Service Tax Rules, 1994, deals with the payment of service tax. The service Tax will be deposited under Head 0044, in from TR-6 in yellow colour as amended vide Service Tax Circular No. 17 / 11 /96 dated 24.10.96 (a copy of which is enclosed as Annexure-II) in any of the bank branches, at present authorized to collect Central Excise Duties within the jurisdiction of Commissionerate of Central Excise Duties within the jurisdiction of Commissionerate of Central Excise, Delhi. A list of such branches along with the codes Nos. (Annexure-III) is enclosed. It is to be noted that each assessee shall choose only one branch convenient to him and all payment shall be made in that branch only.
4.5 The concept of provisional assessment has been built into the scheme of service tax rules. Whenever an assessee, for any reason unable to correctly estimate on the date of deposit, the actual amounts collected for any particular month of period, the assessee may make a request in writing to the Asstt. Commissioner of Central Excise (Service Tax). CR Building, I.P. Estate, New Delhi to make a provisional assessment of the tax on the basis of amount deposited. The said Central Excise Officer will, on receipt of such requiest, order provisional assessment of tax. In this regard the provisions of Central Excise Rules, 1944 have been made applicable. However, there is no requirement to enter into a bond in respect of service tax.
4.6 The Assessee will file the quarterly return in From ST-3 as amended by Notification No. 15 / 97 dated 25.4.97 in (Annexure-IV) in trification. In respect of provisional assessment. The assessee is required to submit a memorandum in From ST-3A (Annexure V) showing details of difference between the Service Tax deposited and the service tax actually collected for each month. The assessee shall submit quarterly return along with the copy each of From TR-6 for the months covered in the quarter.
4.7 The assessment shall be completed on the basis of the particulars furnished in the quarterly return ST-3 and ST-3A, by the said Central Excise Officer. The triplicate copy of the quarterly return so assessed shall be returned to the assessee with assessment memorandum. In cases where the service tax assessed is more than the service tax self determined and paid by the amount of interest determined and baid by the assessee, the assessee shall pay the deficiency along with the amount of interest determined thereon within 10 days of the receipt of the copy of the quarterly return from the Central Excise Officer. The assessee may apply for refund, whenever he has paid service tax in excess of tax assessed. In accordance with the provisions of section 11-B of the Central Excise Act, 1944.
5. Appellate mechanism provided in Central Excise Act, 1944 has been made applicable to Service Tax with some modifications (Section 85 and Sec. 86) of Finance Act, 1994 may be referred to).
6. ADMINISTRATIVE MACHINERY FOR COLLECTION OF SERVICE TAX
The Assistant Commissioner of Central Excise
(Service Tax Cell)
Commissionerate of Central Excise, Delhi
Room No. 107, C.R. Building I.P. Estate,
Tel No. 3722048 & EAPBX 3317741, 43 Ext. 320,376.
The trade is advised to send all correspondences, application for registration, returns etc. to the above address.
2.The trade may please note that:
a). Application for registration in form ST-I received from the assessee shall be acknowledged by an officer of the rank of Superintendent of Central Excise.
b) Certificate of registration in the form ST-2 will be issued under the name and signature of the Assistant Commissioner.
c) The Service Tax collected during any calendar month by the Assessee under Sub-section (1) of Section 68 of the Finance Act, 1994 shall be paid to the credit of Central Government in from TR-6 by the 15th of the following month.
d) Any person, responsible for collecting the Service Tax, who fails to collect the Tax in accordance with the provisions of sub-section (II), shall not withstanding such failure be liable to pay such tax such tax to the credit of the Central Government within SEVENTY FIVE DAYS from the end of the month in which the service was rendered.
e) Quarterly Return filed by the assessee (para 4.7 above will be assessed by the Superintendent of Central Excise (Service Tax).
f) For the purpose of provisional assessment whenever the Asstt. Commissioner will make an order for provisional assessment for the tax, on request being received in writing from the Assessee.
g) The powers of Assessment under Section 72, 73, 74 of Chapter V of the Finance Act, 1994 dealing with best judgment Assessment, value of taxable service, escaping assessment, rectification of mistake will be exercised by the Asstt. Commissioner. In respect of Assessment periods of 5 years or more referred in Section 73 of the Finance Act, 1994 (32 of 1994) Commissioner will be the competent authority to exercise the powers.
COMMISSIONER CENTRAL EXCISE-I
(i) Boards F. No. B-43/10/97-TRU dt. 22.8.97
(ii) Notification No. 15/97 dt. 25.4.97
(iii) Trade Notice No. 47/96 dt. 4.11.96