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Service tax applicability for tour operator

12 August 2013

Dear All,

Can a tour operator residing in Mumbai, providing tour and travelling services in Jammu & Kashmir (Leh & Ladakh) to a resident of Thane collect 3.09% as service tax in the bill ???

Thanks !!!

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3 Replies

CA LOVELY ARORA (C.A. B.Com (H) Graduate) (2151 Points)
Replied 12 August 2013

Dear Digant,

No, the said service would be exempt from the Service Tax.

As the Service Tax i.e. Chapter V of Finance Act is not applicable if the service is provided in the state of Jammu & Kashmir, whether to person residing in that state or to the person residing outside that state.

Thus, the said service is outside the ambit of Finance Act, 1994 and not liable to charge Service Tax.

Best Regards,
CA Lovely Arora
ca.lovelyarora @ gmail.com

Digant Sanghvi (C.A.) (107 Points)
Replied 12 August 2013

Mr. Lovely Arora,

After 1st July 2012, as per Rule 8 of POPS Rules 2012, since service receiver is in Thane i.e. taxable terrritory, the place of provision of service shall be treated as in Thane. Hence, same will be taxable though services will be rendered in J&K (Leh & Ladakh) which are non-taxable teritorries. Therefore, the tour amount collected will be taxable @ 3.09%. Kindly throw light on it adn let me know whether service tax can be charged in the bill.

Before ammendment of 1st July 2012, the said service was not liable for service tax since place of service rendered was non-taxable teritorry i.e. J&K.

Kindly reply.

CA LOVELY ARORA (C.A. B.Com (H) Graduate) (2151 Points)
Replied 13 August 2013

Dear Digant,

Sorry to say, but yes, you are right, as the service provider and service receiver both are located within the taxable territory.. i.e. Mumbai and Thane, and thus, thane would be considered as the place of provision of service being the location of Service Receiver. Rule 8 of POPS, 2012 would be applicable in your case w.e.f. 01st July, 2012. And sorry again, as i had skipped these rules.

And thus, you would be liable to charge service tax of the prescribed amount in your bill.