2026-VIL-1661-CESTAT-BLR-ST
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SERVICE TAX CESTAT Cases

Service Tax - Taxability of outbound/international package tour service - Appellant, engaged in providing tour operator services, was demanded service tax on international package tours on the ground of non-payment of tax during audit - Whether service tax is leviable on outbound tours where the service is consumed by the tourist consumer beyond Indian territory - HELD - The service is consumed by the tourist consumer beyond the Indian territory and hence not liable to levy and collection of service tax under the provisions of the Act, the facts of the present case being squarely covered by the decision of the Larger Bench of the Tribunal on the same issue - The demand on this count is unsustainable - Service Tax - Inclusion of cost of air ticket in value of domestic package tour - Demand was raised treating the cost of air tickets as part of the gross value for the purpose of service tax on domestic package tours - Whether reimbursement of air ticket cost collected from customers can be included in the taxable value and subjected to service tax - HELD - Reimbursement of ticket charges from customers cannot be subjected to service tax, following the decision of the Supreme Court on reimbursable expenses - The demand on this count is unsustainable - Service Tax - Taxability of cancellation charges collected by tour operator - Service tax was demanded on charges collected by the Appellant towards cancellation of bookings - Whether cancellation charges, collected when services are cancelled or withdrawn, amount to consideration for provision of taxable tour operator service - HELD - Booking cancellation charges received by the Appellant are in the nature of compensation and not consideration for service, since levy of service tax can be imposed only when service is actually provided and not on charges collected in the form of damages or penal charges on cancellation or withdrawal of services - No service tax is chargeable on such charges - The demand on this count is unsustainable - Service Tax - Invocation of extended period of limitation - Show cause notice was issued invoking the extended period of limitation for the period 2007-2009, beyond the normal period from the date of filing of ST-3 returns - Whether the extended period of limitation is invokable in the absence of any allegation of fraud, suppression or wilful mis-statement with intent to evade payment of tax - HELD - ST-3 returns for the periods 2007-2008 and 2008-09 were filed well before issuance of the show cause notice, and in the absence of any reason to allege fraud, suppression or wilful negligence to pay service tax, the demand for the entire period from 2007-2009 is barred by limitation - The demand invoking extended period is unsustainable
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