TMI Blog2017 (4) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... or, Commr (AR), for respondent Per: Raju The Appellant Cox Kings Ltd., are engaged in the business of organizing outbound tours. Two notices were issued to the appellants seeking demand of service tax on the activity of outbound tours. The appellants have described their activity as determining the probable dates and venues of tours, finalising the itinerary; booking of accommodation in hotels in foreign countries; planning and booking for travelling through bus, railways, travelling cruise liners, etc., in foreign locations, sightseeing on tours, breakfast/meals; providing service of foreign guides, providing a tour leader to accompany the touring party and Air ticketing, arranging visa and travel insurance to guests as required for foreign travel. 2. The demand of duty was confirmed by the Commissioner. Penalties were also imposed under Section 76, 77 and 78 in one case under Section 76 and under Section 76 only in the 2 nd case. The demand of interest was also confirmed in both the cases. Aggrieved by the said order, the appellants are before the Tribunal. 3. Learned Counsel for the appellants argued that the service tax is destination based consumption tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for tours abroad do not attract service tax. In case of a composite tour which combines tours 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. 3.2 Learned Counsel argued that the changes made with effect from 10.09.2004 have no impact. He pointed out that the definition as given in section 65 (115) of the Finance Act w.e.f. 01/04/2000 up to 09/09/2004 read as follows: - Tour operator means any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988 (59 of 1988) or the rules made there under. The definition as given in section 65 (115) of the Finance Act w.e.f. of Tour Operator w.e.f. 10/09/2004 reads as follows: - Tour operator mean any person engaged in the business of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, it is submitted that the taxable activities carried out by a tour operator even prior to 10 th September 2004, included the planning, scheduling and organizing activities for conducting the tour. It is submitted that without these activities it is not possible to conduct a tour at all. Therefore, it is submitted that what was implied in the definition has been made more specific after 10 th September 2004 by incorporating the particular words in the definition. 3.4 On the basis of above it was argued that the amendment made with effect from 10.09.2004 only extended scope of the services in respect of the mode of transportation only. 3.5 Learned Counsel argued that the services are performed outside India and, therefore, the services are export of services. Learned Counsel argued that in terms of Export of Services Rules, 2005 that the tour operators are classifiable under Rule 3(ii). In the said category in order to consider the said service of export if such service is performed outside India. Thus the learned Counsel argued that the performance of the service outside India is a mandatory condition for considering the service of tour operator as export of service. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows:- 16.03.05 to 16.06.05 The Export of Services Rules, 2005 were introduced w.e.f. 16.03.05 by notification no.9/2005-ST dated 03.03.05. The condition to receive consideration in foreign currency was applicable only to services falling under rule 3(3) that too if the recipient of service has any commercial establishment in India. 17.06.05 to 18.04.06 The Export of Service Rules 2005 were amended by notification no.28/2005-ST dated 07.06.05. The said notification introduced the condition of receipt of consideration in foreign currency even for rule 3(2). As tour operator service is covered under rule 3(2), the said condition was applicable during the period 17.06.05 to 18.04.06. 19.04.06 to 28.02.07 The Export of Service Rules 2005 were further amended by notification no.13/2006-ST dated 19.04.06 wherein the condition to receive foreign currency was provided in rule 3(2) whereas rule 3(1) provided the various conditions for treating any service as Export of Service. Rule 3(2) rule 3(1) were completely independent hence the provisions of rule 3(2) did not apply to rule 3(1). 3.8 Learned Counsel further argued that the amount rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of UOI v. Paras Laminates - 1990 (49) ELT 322 (SC). To assert that it is open to the Tribunal to refer the matter to Larger Bench when there is a reason to doubt the correctness of the earlier decision. 4.1 He argued that the decision of the Tribunal in the appellant s own case is based on a wrong interpretation of the statute. He argued that the major ground on which the assessee s appeal was allowed by Delhi Bench of the Tribunal was the absence of the word generic facet of the definition of Tour Operator . It was held in the said decision that if the scope of the activities of planning, scheduling, organizing or arranging tours (which may include arrangement for accommodation, sightseeing, or other similar services) was the same as operating tours then there was no need of the specific component of the definition. In the said decision it has been held in the absence of word operating in the generic fact of the definition applied in the tour operators. It was argued that the Tribunal has wrongly held that the specific component of the definition would have been surplusage in legislative drafting if the generic facet of the definition was considered to include opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and defeat legislative and the purpose of the taxable service enacted. In view of the above, the learned A.R. argued that the Delhi Bench of the Tribunal has not considered various principles laid down by the Hon ble Supreme Court due to the fact that the decision of the Tribunal in the appellant s own case per incuriam. 4.5 Learned A.R. further argued that the services provided by tour operator is not covered territorially. Learned A.R. argued that the decision of the Hon ble Apex Court in the case of Bengal Immunity Company Ltd. vs. State of Bihar and Ors. was not brought to the notice of the Tribunal. He argued that the Hon ble Apex Court in the said case has observed that the situs of an intangible concept like a sale can only be fixed notionally by the application of artificial rules invented either by judges as art of the judge made law of the land, or by some legislative authority . Similarly Hon ble Supreme Court observed that the situs of sale can only be fixed wither by the appropriate legislature or by judge made law, and there is no settled principles for determining the situs of sale . He argued that the legislature has vide Export of services rules pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transport other than by a tourist vehicle (covered by a permit issued under the provisions of the Motor Vehicles Act, 1988 or the Rules made thereunder), such activity falls outside the scope of the definition of tour operator ; (c) The consideration received for operating and arranging outbound tours (provided by the appellants and consumed by tourists beyond the territory of India) is not liable to levy and collection of Service Tax under the provisions of the Act, since the taxable event is the provision of a taxable service; and not the pursuit of the profession, of a taxable service providers. The Act authorizes the levy and collection of tax for providing a destination and consumption based taxable service but does not authorize levy and collection of tax, for a service provided and consumed beyond the Indian territory; and (d) Without prejudice to the conclusions summarized in (a) to (c) supra, we hold : (i) Planning and scheduling of outbound tours may not be components of services provided to tourists, would amount to an incidental activity undertaken as a prelude to providing tours and thus the service if at all provided is to the service provider itself. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said order, are as follows i) If the service provided by the appellant falls within the definition of the taxable service ii) If the service is provided and consumed within the territory of India or otherwise The two issues are discussed in detail in para 6 and 7 below. 6 In this para we examine the reasoning given in the said order of the Tribunal on the issue of the definition of the term tour operator and the taxable service. The issues before the Tribunal in the aforesaid case have been elaborated in para 16 of the said order, which reads as follows:- 16. In view of the core dispute between the parties, the following are the substantive issues that fall for determination : Issues : a (i) What is the scope of the expression tour operator defined in Section 65(115) of the Act, post-amendment of the definition by the Finance Act, 2004 (w.e.f. 10-9-2004)? (ii) Does the 2004 amendment alter the contours of the expression and if so, to what extent? b Whether outbound tours are outside the purview of the taxable service enumerated in Section 65(105)(h) of the Act? 6.1 The scope of expression of Tour Operator as defined und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion includes operating tours as well, there was no necessity for the second and specific facet spelt out in the definition, namely operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988, or the rules made thereunder. This is so since if the generic facet of the definition had included operating of tours by any mode of transport as well, there was no necessity for the inclusionary facet, whereby operating tours in a tourist vehicle covered by a permit granted under the provisions of the Motors Vehicles Act, 1988 or the rules made thereunder, is specified to be the defined service as well. Operating tours by any mode of transport would have clearly covered operating tours in a tourist vehicle covered by a permit granted under the 1988 Act or the rules made thereunder; and the later inclusionary clause would amount to a surplusage. We are compelled to the above interpretation of the amended definition since it is an established principle of statutory interpretation that attribution of surplusage in legislative drafting, must clearly be avoided. Patanjali Shastri, C.J.I. observed in Aswini Kumar Ghose v. Arabinda Bose - AIR 1952 SC 369: It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing or arranging tours by any mode of transport (including arrangements for accommodation, sightseeing, or other similar services) including where the tour is by a tourist vehicle covered by provisions of the 1988 Act or the rules made thereunder, is one facet of the definition; and the operating of tours in a tourist vehicle covered by a permit granted under the provisions of the 1988 Act or the rules made thereunder is another and a distinct facet, of the definition. In the first facet of the definition, the activity of the actual operating of tour is excluded. As a consequence of the specific verbal formula in the definition it must compellingly follow that where a person is engaged in a composite activity of operating tours including the planning, scheduling, organising or arranging of such tours (including arrangements for accommodation, sightseeing or other similar services), by a mode of transport other than a tourist vehicle, such activity falls outside the scope of tour operator . However, the activity of planning, scheduling, organising or arranging tours including operating the tour in a tourist vehicle covered by a permit granted under the 1988 Act or the rules ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tour. In our considered view the term Tour operator defines only the person providing the service, it does not define the taxable service. In our considered view the said definition of service provider namely, tour operator , by itself cannot be used to define if a particular service falls within the scope of the taxable service or not. The definition can only be used to say if a person is a tour operator or not. The conclusion reached by the tribunal, after analyzing the changes made in the definition of the term tour operator , is reproduced below On a true and fair construction of the amended definition, the amendment expands the scope of the expression to include in the taxable service , engagement in the business of planning, scheduling, organising or arranging tours (which may include arrangements for accommodation, sightseeing or similar services) by any mode of transport (not limited to tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988 or the rules made thereunder). (emphasis supplied) It is incorrect to say that the expression tour operator includes or excludes any taxable service . BY definition all services pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business (c) one that performs surgical operations (d) one that deals in stocks or commodities (2) (a) mountebank, fraud (b) a shrewd and skillful person who knows how to circumvent restrictions or difficulties (3) (a) something and especially a symbol that denotes or performs a mathematical or logical operation (b) a mathematical function (4) a binding site in a DNA chain at which a genetic repressor binds to inhibit the initiation of transcription of messenger RNA by one or more nearby structural genes -called also operator gene - compare operon II. In Cambridge dictionary - (a) someone whose job is to use and control machine or vehicle: a computer operator (b) a company that does a particular type of business: a tour operator (c) a person who helps to connect people on a phone system a smooth, clever, etc. operator (d) someone who is skilled at dealing with people and getting what he or she wants from a situation: He has shown himself to be a can any operator in wagenegotiations. From these definitions of the word Operator , the definition of term Tour operator appearing in the Finance Act 94, would mean a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (All India Permit for Tourist Transport Operators) Rules, 1993, issued under the Motor Vehicles Act 1988. The definition of Tourist Transport Operator as provided therein is as follows:- 2[(g) Tourist Transport Operator means- (a) A company or an individual engaged in a business of promotion of tourism by providing tourist transport vehicles on tourist circuits; or (b) any travel agency (who possesses his own vehicle or have taken a vehicle on lease for this purpose for a period of at least one year) run by a company or an individual provides all tickets for travel by air, rail, ship, passport, visa and also arrange accommodation, tours, entertainment and other tourism related services; or (c) the tour operator (Company or individual who provides for transport, accommodation, sight-seeing, entertainment and other tourist related, services for tourist, and who possesses his own vehicle or has taken a vehicle on lease for this purpose for a period of at least one year and is recognised by the Department of Tourist of the Government of India;] It can be seen that the term operator , applies to a wide range of businesses, from a person engaged in the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor . 6.7.2 One may argue that the term Tourist Transport Operator also defines a tour operator in clause (c) thereof. It can be seen that the said definition has a necessary ingredient of ownership or lease of the vehicle. That is not so in the instant case. 6.8 The activity of appellant described as operating tours is not different from planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport. The said order holds that the appellant is engaged in the activity of operating tours which is different from the activity of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport . The said order does not specify as to what is the activity done by the appellant which falls outside the description of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport and which leads to the said conclusion that they are operating tours . The said ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planning and booking for travelling through bus, railways, travelling cruise liners, etc., in foreign locations, organising or arranging/in relation to tour Specifically included as the appellants organise and arrange the travel in the foreign locations sightseeing on tours, organising or arranging/in relation to tour Specifically included as the appellants organise and arrange the tour guides breakfast/meals; organising or arranging/in relation to tour Specifically included as similar services in relation to tour and as the appellants organise and arrange food in hotels and restaurants abroad providing service of foreign guides, providing a tour leader to accompany the touring party organising or arranging/in relation to tour Specifically included as the appellants organise and arrange the tour guides to guide the tourists Air ticketing, arranging visa and travel insurance to guests as required for foreign travel, organising or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cruise liners, etc., in foreign locations, organising or arranging/in relation to tour Specifically included as the appellants organise and arrange the travel in the foreign locations sightseeing on tours, organising or arranging/in relation to tour Specifically included as the appellants organise and arrange the tour guides breakfast/meals; organising or arranging/in relation to tour Specifically included as similar services in relation to tour and as the appellants organise and arrange food in hotels and restaurants abroad providing service of foreign guides, providing a tour leader to accompany the touring party organising or arranging/in relation to tour Specifically included as the appellants organise and arrange the tour guides to guide the tourists Air ticketing, arranging visa and travel insurance to guests as required for foreign travel, organising or arranging/in relation to tour Specifically included Spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this proposition and the application of the principles of surplusage . In the case of Oswal Agro Mills - 1993 (66) ELT 37 (SC) the Hon ble Apex Court held as follows The task of interpretation of the statute is not a mechanical one. It is more than mere reading of mathematical formula. It is an attempt to discover the intention of the legislature from the language used by it, keeping always in mind, that the language is at best an imperfect instrument for the expression of actual human thoughts. It is also idle to expect that the draftsman drafted it with divine prescience and perfect and unequivocal clarity. Therefore, court would endeavour to eschew literal construction if it produces manifest absurdity or unjust result. In Manmohan Das V. Vishnu Das [AIR 1967 SC 643] a Constitution bench held as follows : The ordinary rule of construction is the provision of a statute must be construed in accordance with the language used therein unless there are compelling reasons, such as, where a literal construction would reduce the provision to absurdity or prevent manifest intention of the legislature from being carried out. We are of the considered opinion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... motion of tourism by providing tourist transport vehicles on tourist circuits; or (b) any travel agency (who possesses his own vehicle or have taken a vehicle on lease for this purpose for a period of at least one year) run by a company or an individual provides all tickets for travel by air, rail, ship, passport, visa and also arrange accommodation, tours, entertainment and other tourism related services; or (c) the tour operator (Company or individual who provides for transport, accommodation, sight-seeing, entertainment and other tourist related, services for tourist, and who possesses his own vehicle or has taken a vehicle on lease for this purpose for a period of at least one year and is recognised by the Department of Tourist of the Government of India;] It includes in its ambit a person merely providing tourist transport vehicles on tourist circuits. It is obvious that such a person is simply providing tourist vehicles on certain routes and is not engaged in the activity of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services). From the rules it can be seen that the permit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d taxable service but does not authorize levy and collection of tax, for a service provided and consumed beyond the Indian territory. This conclusion is based on the following assumption (refer para 21 (c) of the order) The consideration received for operating and arranging outbound tours (provided by the appellants and consumed by tourists beyond the territory of India) is not liable to levy and collection of Service Tax under the provisions of the Act, since the taxable event is the provision of a taxable service; and not the pursuit of the profession, of a taxable service providers. A perusal of the para 18 (a) to (m) of the said order shows that the said assumption has been made without analysing the activities of the appellant and without examining the scope of taxable service. The taxable activity is not the tour but Any service provided (or to be provided) to any person, in relation to a tour by a tour operator . Thus the tour is not the taxable event. The taxable service is all the services provided in relation to the tour . 7.1 We observe that before the tour starts most of the services are provided by the appellant and consumed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sitting in India. It relieves the client of the burden of booking of travel arrangements in foreign countries. It is received and consumed before the tour starts when the client is still in India. Consumed in India The sightseeing is booked with local guides abroad or appellants own guides on tours, In case of local guides abroad the services provided is only of booking guides In case the appellants provide own guides the actual service of guide is provided abroad The activity of booking a local guide abroad is provided in and consumed in India. The activity of guide is provided and consumed abroad The breakfast/meals are booked by the appellant with the restaurants/ Hotels. The service provided can be of just booking of meals or actually providing meals. In case the activity is of booking meals with Hotels/ restaurants, the activity is provided and consumed in India. In case the meals Specifically included as similar services in relation to tour and as the appellants organise and arrange food in hotels and restaurants abroad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It presumes that the appellant are Operating tours without examining the specific activities done by the appellant and without analysing the definition of the term Operator . It does not elaborate as to how it concludes that the appellant are Operating tours . It does not elaborate as to how the activity of Operating tours is an activity different from planning, scheduling, organizing or arranging tours. 8.2 It can be seen that the said order shortlists the question in para 16(b) as follows (b) Whether outbound tours are outside the purview of the taxable service enumerated in Section 65(105)(h) of the Act? It is apparent that the said decision treats Outbound Tours as the service sought to be taxed. It can be seen that the Outbound Tours are not the taxable service. In fact the taxable service is not Tours or Outbound tours for that matter. The taxable service is Any service provided (or to be provided) to any person, by a tour operator in relation to a tour. Thus what was needed to be examined for the purpose of decision is the services provided in relation to the such Tours . Similarly what needs to be examined was the place where such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int of substance might be decided. We went on to say that the point had to be decided by the earlier court before it could make the order which it did; nevertheless, since it was decided without argument, without reference to the crucial words of the rule, and without any citation of authority , it was not binding and would not be followed. Precedents sub silentio and without argument are of no moment. This rule has ever since been followed. One of the chief reasons for the doctrine of precedent is that a matter that has once been fully argued and decided should not be allowed to be reopened. The weight accorded to dicta varies with the type of dictum. Mere casual expressions carry no weight at all. Not every passing expression of a Judge, however eminent, can be treated as an ex cathedra statement, having the weight of authority. 8.4 For the following reasons the said decision is sub silentio , and therefore not a binding precedent:- i) it does not identify any activities that make the appellant an Operator as against planner, scheduler, organizer or arranger of tours. ii) it fails to consider the provisions of the Section 65(105)(h) of the Act in the said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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