B.S.V. Murthy, Member (T)

1. The appellant, M/s. Cox & Kings (India) Ltd., is engaged in providing services of booking of Air rickets, operating of tours and other travel related services to various customers. Accordingly they are registered with the Service Tax department under the category of Tour Operator, Air Travel Agent and Travel Agents services. The present appeal has arisen in respect of three major types of out-bound tour operator services offered by the appellant on the ground that out-bound tours conducted by the appellant Is taxable under tour operator services since the tour operator as well as the customers/recipients are located within India. Two Show Cause Notices were issued proposing to demand Service tax for the period from 10-9-2004 to 31-3-2008 and from 1-4-2008 to 31-3-2009 which have culminated in the impugned order wherein, the total Service Tax demand of Rs. 4,1134,255/- with interest have been confirmed against the appellant. Further penalties under Sections 76, 77 & 78 of the Finance Act, 1994 have also been imposed.

2. The learned Advocate on behalf of the appellant submitted that the services provided in the out-bound tours were performed outside India. Therefore they are not liable to Service tax under the provisions of Finance Act, 1994. For this purpose, he relied upon the Circulars issued by the department from time to time and also the decision of the Honble Supreme Court in the case of All India Federation of Tax Practitioners v. Union of India reported in 2007 (7) S.T.R. 625 (S.C.). He also relied upon the OECD guidelines. It was also submitted that outbound tours organized would qualify as export of service under Export of Service Rules, 2005. Further even assuming that the appellant is liable to service tax, the appellant is entitled for abatement under Notification No. 12/2004, dated 10-9-2004 and also treatment of the amount received as cum-tax.

3. The learned Jt. CDR, on the other hand, submitted that according to the definition of tour operators service, tour operator means any person engaged in the business of planning, scheduling, organizing or arranging tours by any mode of transport, In this case, the planning, scheduling, organizing or arranging is done by the appellant and these are done in India only. Therefore, the requirement of definition of tour operator is fulfilled and the services provided by the appellant have to be considered as rendered in India only.

4. We have considered the submissions made by both sides. Detailed submissions were made with regard to definition of tour operator and amendments made to the definition from 1-9-97 onwards till date, OECD Guidelines, Export of Service Rules, etc. However at this stage, when we are considering whether the pre-deposit to be waived and stay to be granted only, we do not feel it necessary to go into all details and discuss the issues in view of the fact that the Circular issued by CBEC and produced before us, prima facie covers the issue involved in this case and the same is reproduced below :

Tour Operator service -- Exemption to Haj & Umrah pilgrimage under Export of Services Rules, 2005 clarified

Circular No. 117/11/2009-S.T., dated 30-10-2009

F.No. 137/502/2009-CX.,- 4

Government of India

Ministry of Finance (Department of Revenue)

Central Board of Excise & Customs, New Delhi

Subject : Leviability of service tax on Tour Operator service in connection with Haj & Umrah pilgrimage - Regarding.

On a reference received by the Board the matter regarding leviability of service tax on tour operator service in connection with Haj & Umrah Pilgrimage was examined.

The amount charged to the pilgrims in India undertaking Haj and Umrah pilgrimage, is for services provided by the Government of Saudi Arabia and the tour takes place outside India. As per Rule 3(1)(ii) of the Export of Services Rules, 2005, (Circular No. 111/05/2009-S.T, dated 24-2-2009), the service in respect of tour operator is export if such service is performed outside India. It is also provided therein that where such taxable service is partly performed outside India, it shall be treated as performed outside India. Therefore, it is clarified that service tax is not chargeable on the services provided in respect of tour undertaken for carrying out.

Haj and Umrah Pilgrimage in Saudi Arabia by Indian pilgrims considering these as export of service, provided they fulfill the other conditions of export as provided in Export of Service Rules.

In this case also, as per the record, the service is performed outside India and even if the view is taken that planning, scheduling, organizing or arranging etc. is done in India, it would mean that the service is partly performed in India and partly performed outside India. In these circumstances, the services provided by the appellant prima facie is covered by the Circular issued by the Board. All other submissions made by both sides require detailed consideration and since the appellants have made out prima facie case on the basis of Circular issued by the Board, we consider that this is a fit case for waiver of pre-deposit. Further, it was also submitted that the appellants have already reversed an amount of Rs. 4,33,361/-. Treating the amount already paid by the appellant is sufficient, we waive the requirement of pre-deposit of the balance amount due and grant stay against recovery during the pendency of the appeal.

(Pronounced in the open court on 28-6-2011)