Court :
Brief :
The applicant is engaged in the business of providing the tour operators with the ‘Ancillary services’ such as Elephant Ride, guide charges, assistance charges, home host dinner, lunch/dinner at local restaurants, boat ride, camel ride, and saree turban tying, etc. Moreover, ancillary services do not include planning, scheduling, arranging tours, organizing tours by any mode of transportation. The Applicant receives service orders from the main tour operator to provide a range of services to the passenger/ tourist. There is a contractual understanding between the tourist and the main tour operator to provide a complete packaged tour. The applicant raises bill for the ancillary services provided and a consolidated bill is raised by the main tour operator to the customers. The important thing to note here is that the accommodation and transport charges are included by the main tour operator in the bill, not by the applicant.
Citation :
The applicant is engaged in the business of providing the tour operators with the ‘Ancillary services’ such as Elephant Ride, guide charges, assistance charges, home host dinner, lunch/dinner at local restaurants, boat ride, camel ride, and saree turban tying, etc. Moreover, ancillary services do not include planning, scheduling, arranging tours, organizing tours by any mode of transportation. The Applicant receives service orders from the main tour operator to provide a range of services to the passenger/ tourist. There is a contractual understanding between the tourist and the main tour operator to provide a complete packaged tour. The applicant raises bill for the ancillary services provided and a consolidated bill is raised by the main tour operator to the customers. The important thing to note here is that the accommodation and transport charges are included by the main tour operator in the bill, not by the applicant.
1.Whether the ancillary services provided to the tour operator falls within the ambit of ‘support services’ or ‘supply of tour operator services’?
2. What will be the rate of GST applicable to the ancillary services provided by the applicant?
Vide Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017, the rate of tax for supply of tour operator services has been specified at the rate of 2.5% under Heading 9985(i). The rate specified for other support services under Heading 9985(iii) is 9%.
In the Rate Notification, the phrase Tour Operator’ has been defined to mean: –
a. Any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport
b. any person engaged in the business of operating tours.
Moreover, the meaning of term Tour has not been defined in the Rate Notification, therefore, reference is made to the dictionary meaning of the term Tour’. As per dictionary, tour means a travel from one place to another by any mode of transportation.
Contentions by Applicant- As per the Rate Notification, Tour Operator include any person engaged in the business of operating Tours. The term ‘business of operating tours’ is very exhaustive and it will include any activity which are incidental and ancillary to the business of operating tours like elephant ride, guide services, boat ride, local sightseeing etc. Hence, the applicant is of the opinion that he falls under the definition of tour operator.
Reasoning by Authority and Decision- In view of the definition of tour and tour operator, supply of transport service in a tour package is very essential to classified as tour operator under GST Act.
In addition to this, two conditions are, essential to categorize a tour operator under 5% tax category which are mentioned below –
a. Bill issued for supply of tour operating service should be a consolidated one i.e. inclusive of accommodation and transportation charges.
b. Provided that credit of input tax charged on goods and services used in supplying the service [other than the input tax credit of input service in the same line of business (i.e. tour operator service procured from another tour operator)] has not been taken.
The Rajasthan AAR passed the advance ruling based on the rationale that the applicant is not a tour operator as it did not charge any charges for the accommodation and transportation services, therefore, the services provided by the applicant does not fall within the ambit of ‘supply of tour operator services’. The AAR after taking into consideration the work of the applicant, observed that the services provided to the tour operators are covered within the ambit of ‘Support Services’ and as a result 18% GST wherein 9% CGST and 9% SGST is applicable.
In case of Golden Vacations Tours and Travels, AAR ruled that the applicant, if arranges for clients only accommodation in hotels, is supplying a service classifiable under SAC 998552(Reservation services for accommodation, cruises and package tours). lt is taxable under Sl No. 23(iii) of the Rate Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 at the rate of 18%. Moreover, the applicant is eligible to claim the input tax credit as admissible under the law.
Advance Ruling Authority has been strictly analysing each and every case before passing out the judgement. If the taxpayer is involved in providing any kind of ancillary services of tour operators and not qualifying all the parameters required for falling into 5% category, then there is no chance that the taxpayer can avail the benefit of concessional GST rate of 5%.
But at the same time, it is to be kept into mind that advance ruling is applicable on person seeking the same and it has no binding effect on other person.
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