The CESTAT, Delhi held that tour operators are not liable to pay service tax in respect of outbound tours for performing Hajj/Umrah.
The appellants are engaged in providing the services of tour operators and air ticket agents. They were also providing packaged tour operator services by way of conducting packaged tours for Hajj/ Umrah pilgrims to Mecca-Madina at Saudi Arabia. Based on an intelligence, it was observed that the appellants have not obtained the service tax registrations and have failed to declare their taxable receipts to the service tax Department. Several Show Cause Notices were issued. The duty demand was raised alongwith the proposal of recovery of interest and the imposition of penalty.
The appellant has mentioned that no service tax is applicable on inbound tours carried by the appellant. The issue is no more res-integra as stands decided by this Tribunal in the case of Cox and Kings India Limited vs. CST, New Delhi reported in 2014 (35) STR 817 (Trib-Delhi). It is further submitted that place of provision for the service herein i.e. the tour for Hajj to Mecca is outside the taxable territory. As per the Rules of place of provision there arises no service tax liability.
The appellant impressed upon the exemption notification No. 25/2012 submitting that Entry 5 B of said Mega Notification exempts the services provided by a person by way of conduct of religious ceremony, the payment of service charges is also exempted for such services. The Board Circular dated 30.10.2009 is also relied upon under which the service tax is not changeable on the services provided in respect of tour undertaken for the Hajj Pilgrims. With respect to the period post negative list the amendments in the rules of place of provision of service in the year 2012 have been impressed upon, submitting that the services were still not made taxable. The demand is alleged to have wrongly been confirmed. For these reasons there is no reason for imposition of penalty.
The tribunal noted that the Place of Provision of Service Rules are same. We observe that the amendment in Mega Notification after coming of negative list also supports the appellants’ case. This entry still exempts the services by the specified organization in respect of a religious pilgrimage has facilitated by Ministry of External Affairs of Government of India. There is no denial to the fact that the Ministry of External Affairs only allots 30% of its Hajj pilgrimage quota to the appellants. Thus, seen from this angle as well, we hold that services in question are exempted from the tax liability.
Case Title: M/s. Amber Travel Services V/s Commissioner
Citation: SERVICE TAX APPEAL No. 51443 of 2018