2024-VIL-1177-CESTAT-AHM-ST
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SERVICE TAX CESTAT Cases

Service Tax - Taxability of Tour Operator services for tours conducted to Jammu & Kashmir (J&K) during the period 2006-07 to 2010-11 – Demand of service tax on the ground that the appellants were engaged in the business of planning, scheduling, organizing or arranging tours, which is a taxable service under the Finance Act, 1994 - Whether the services provided by the appellants in relation to tours to J&K are taxable under the Service Tax provisions, considering that Section 64 of the Finance Act, 1994 excludes J&K from the levy of service tax – HELD - the entire activity of planning, scheduling, organizing and arranging the tours is undertaken in the taxable territory, i.e., outside J&K. The taxable service is the activity of planning, scheduling, organizing and arranging, and this is provided in the taxable territory. Therefore, even if the client tours a non-taxable territory like J&K, the service of planning, scheduling, organizing and arranging will remain taxable as it is provided in the taxable territory - the appellants' argument that the services are consumed in J&K and are therefore not taxable, is rejected - appeal is partly allowed in so far as the issue of limitation is concerned. The matter is remanded to the original adjudicating authority for determination of duty liability if any within the period of limitation – the appeal is partly allowed - Whether the extended period of limitation can be invoked for recovery of the service tax demand, considering that the appellants may have had a bonafide belief that the services provided by them were not taxable – HELD - the issue of the applicability of service tax on tours to J&K, in light of the specific exclusion under Section 64 of the Finance Act, 1994, was a contested legal issue. In these circumstances, there may not have been any intent to evade payment of duty, and the appellants may have had a bonafide belief that they were not liable to pay service tax. Consequently, the extended period of limitation cannot be invoked for recovery of the taxes - matter remanded to the original adjudicating authority for determination of the duty liability within the normal period of limitation.
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