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2024 (1) TMI 681 - AT - Service TaxLevy of service tax - tour operator service - providing short-term accommodation service or not - entitlement to abatement of 90% on the gross amount charged under the Abatement Notifications in respect of service of a tour operator - invocation of Section 73A of the Finance Act - penalties. Whether the appellant is providing short-term accommodation services? - HELD THAT:- The show cause notice and the impugned order have placed reliance upon clauses of the Privilege Partnership Agreement entered into between the appellant and the hotels. The show cause notice nor the impugned order mention that the appellant is a hotel. The appellant is merely a booking agent and not an agent of the hotel, as is evident from Privilege Partnership Agreement and the User Agreement entered into between the appellant and the customers. It is the hotel that has provided the service of short-term accommodation to the customers, and the appellant has merely acted as a facilitator between the hotel and the customer for the provision of short-term accommodation service by the hotels to the customers. The appellant is thus not a hotel. The appellant cannot, therefore, be said to be the provider of short-term accommodation service to the customers. Whether the appellant is entitled to, as a tour operator, ninety percent abatement under the Abatement Notifications? - HELD THAT:- A tour operator can provide for a host of services, including booking of accommodation, transportation and food facility. However, when a person, otherwise is qualified as a tour operator but provides only booking of accommodation service, then such a tour operator would be entitled to ninety percent abatement. What is required is the qualification of a tour operator itself (qua the person), and not as the services rendered (qua transaction). It is, therefore, not possible to accept the contention of the learned special counsel for the department that each transaction relating to the service that is provided has to be examined. Thus, as the appellant is a tour operator it would be entitled to claim abatement under the Abatement Notifications. Whether the demand proposed under section 73 can be confirmed? - HELD THAT:- The appellant is providing tour operator service and is entitled to claim abatement of ninety percent. The demand under section 73 of the Finance Act has been confirmed holding that the appellant is providing short-term accommodation service. The demand that has been confirmed under section 73A of the Finance Act, therefore, deserves to set aside. Whether the provisions of section 73A would be applicable? - HELD THAT:- The taxes collected by the appellant from customer has been paid to the hotel and the appellant has also discharged has service tax liability by paying service tax on the amount collected by from the customer after availing the benefit of the Abatement Notifications as a tour operator. The appellant had not collected any amount, which was not required to be collected, from any person, in any manner as representing service tax. Section 73A of the Finance Act would, therefore, not be attracted - Reliance can be placed on the judgment of the Supreme Court in RS. JOSHI, SALES TAX OFFICER, GUJARAT VERSUS AJIT MILLS LIMITED AND ANOTHER (AND ANOTHER CASE) [1977 (8) TMI 140 - SUPREME COURT], wherein the Supreme Court held that the word ‘collected’ can only refer to cases where a person collects an amount from another with an intention to retain the said amount - Thus, the provisions of section 73A of the Finance Act could not have been resorted to by the department. Whether the demand under section 73A can be confirmed? - HELD THAT:- The demand under section 73A of the Finance Act could not have been proposed. The confirmation of demand, therefore, deserves to be set aside - What is also important to notice is that the impugned order has confirmed the demand of service tax under section 73 of the Finance Act on the gross amount collected by the appellant from the customers, which included the amount remitted to the hotels as well. The impugned order has also confirmed the demand made under section 73A of the Finance Act on the same gross amount. There is, therefore, duplication of the demand. Penalties - HELD THAT:- The penalties imposed upon the Vice President and the Director of the appellant that have been assailed in Service Tax Appeal No. 51845 of 2021 and Service Tax Appeal No. 51846 of 2021, therefore, cannot also be sustained. Appeal allowed.
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