2026-VIL-1057-CESTAT-MUM-ST
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SERVICE TAX CESTAT Cases

Service Tax - Taxability of outbound tour operator services - Demand of service tax on outbound tours (tours conducted wholly outside India for Indian residents) for the period April 2005 to March 2010, on the ground that the company failed to pay service tax on gross amounts received towards rendering of outbound tour services - Whether services rendered in relation to outbound tours, where the tour commences outside India and terminates outside India, are liable to service tax under Section 65(105)(n) read with Sections 64 and 66 of the Finance Act, 1994, during the period from April 1, 2005 to March 31, 2010 – HELD - On plain reading of the legal provisions defining taxable service as any service provided by a tour operator in relation to a tour, read with the definition of tour as a journey from one place to another, and harmoniously interpreting Sections 64 and 66 of the Finance Act, 1994, services rendered by a tour operator for a journey beginning outside India and ending outside India, being consumed by a person while remaining outside India, cannot be brought within the scope of taxable service - The definition of taxable service must fit within the framework that service tax is a destination-based consumption tax intended to tax specified activities that undisputedly take place in India and exclude tax on activities that undisputedly do not occur in India. Although the definition of tour operator was amended with effect from September 10, 2004 to expand the scope from limited tourist vehicles to any mode of transport, this amendment was merely to remove the restriction on mode of transportation and did not expand the tax base to include outbound tours performed wholly outside Indian territory. The Departmental instructions issued while expanding the scope of tour operator services in 2004 specifically refer to extension of levy on package tour operators organizing tours involving any mode of transport but do not contemplate bringing outbound tours within the service tax net - The scope of the phrase tour operator may cover persons performing services as per the definition, and the phrase taxable service may include services rendered by such tour operator, but the taxable nature of service tax levy under Sections 64 and 66 operates only for services rendered by a tour operator for journeys performed within the geographical area to which Chapter V of the Finance Act applies - The impugned order is set aside. The appeal filed by the company is allowed and the appeal filed by the revenue is dismissed
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