Hi Tour Mamallapuram’s Mere Air-Ticket Sales Excluded From Taxable Value, Chennai CESTAT Holds

The appellant, registered as a provider of Tour Operator service, booked air tickets for customers during October 2014 to March 2015 and invoiced the transactions as “Sale of Air tickets.”

The Department treated the ticket amounts as part of the taxable value of the appellant’s services and issued a show-cause notice proposing recovery of service tax, interest and penalty under Section 76 of the Finance Act, 1994.

The adjudicating authority confirmed the demand and penalty; the Commissioner (Appeals) upheld that order.

The appellant appealed to the Tribunal, relying on prior decisions in its own cases concerning the sale or trading of air tickets.

The Tribunal followed its earlier decisions in the appellant’s own cases, particularly the decisions holding that the sale or trading of air tickets, without other activities or an established commission arrangement, is not by itself a taxable event under Tour Operator service.

The appellant was therefore not liable to service tax on the margin earned from booking domestic travel tickets.

The judgment did not identify or independently analyse a specific statutory provision defining the taxable value of Tour Operator service.

The Tribunal considered the present dispute to concern the same kind of ticket transactions addressed in its earlier decisions in the appellant’s cases.

The Revenue did not show that the cited decision in the appellant’s own case had failed to attain finality, or that the transactions in the present appeal were materially different.

Applying the coordinate Bench’s reasoning, the Tribunal found no basis to take a different view.

It set aside the impugned appellate order and allowed the appeal with consequential relief, if any, in accordance with law.