Service Tax on Travel Agent's Services
Service tax has been imposed on travel agent's services rendered by any travel
agent by the Finance Act, 2004 with effect from 10th September, 2004. The gross
amount charged to or total consideration received from any person in relation to
services connected to booking of passage for travel is chargeable to service
tax, i.e. services provided by travel agent to any customer. However, services
related to air travel agents and rail travel agents are not covered in this
category.
Meaning of Travel Agent
Section 65(115a) defines `travel agent' as under —
"travel agent means any person engaged in providing any service connected with
booking of passage for travel, but does not include air travel agent and rail
travel agent".
The above definition is a specific and exclusive definition of travel agency
according to which –
(a) travel agent may be any person (i.e. individual, firm, company, commercial
concern, etc.)
(b) he must be engaged in providing a service.
(c) the said service must be any service connected with booking of passage for
travel.
(d) booking of passage for travel can be by any mode of transport except air and
railways.
(e) travel agent does not include —
(i) air travel agent
(ii) rail travel agent
Booking of passage for travel would include ticketing or arranging or organizing
the travel passage.
Taxable Service
Section 65(105)(zzx) defines `taxable service' as under —
"any service provided or to be provided to any person, by a travel agent, in
relation to booking of passage for travel".
The services rendered by travel agents/agency shall be taxable to service tax
when provided to a customer and when the services so provided relate to booking
of passage for travel. The booking should be for passage leading to undertake a
journey by travelling.
Taxable services should satisfy the following conditions —
(a) services should be provided to a customer, (upto 15-5-2008) and to any
person (w.e.f. 16-5-2008).
(b) services should be provided by any person who is a travel agent.
(c) Services should be in relation to booking of passage by air.
(d) Service does not include services rendered by rail travel agents/air travel
agents.
Business auxiliary services are different from travel agent services which is a
distinct taxable service under section 65 (105) (zzx) of the Finance Act, 1994.
Travel agent means any person engaged in providing any service connected with
booking of passage for travel, but does not include air travel agent and rail
travel agent. Taxable service means any service provided or to be provided to
any person, by a travel agent, in relation to booking of passage for travel. On
the other hand, business auxiliary services [section 65 (12)] covers marketing,
sales promotion and other services including services rendered by commission
agents. In the instant case, querist is not a commission agent but a travel
agent and as such, he shall be liable to Service Tax under travel agency
services.
Replacement of `customer' with `any person'
Finance Act, 2008 has substituted the words `any person' for the word `customer'
w.e.f. 16.5.2008 as the service tax is levied on service and status of recipient
of taxable services should not determine the tax treatment of a given service.
In Sharma Transports v. CC, CE & ST (Appeals), 2009 -TMI - 34216 - CESTAT,
BANGALORE, it was held that assessee's selling of passenger tickets as an agent
and receiving commission is covered as travel agent's service and not as
business auxiliary service.
Travel agents providing services of booking of passage by road, boats, steamer,
fiery, sea cruise etc. shall be covered for service tax. Agents booking
conducted tours will also be covered.
Departmental Clarification
CBEC has clarified as follows vide Circular No. 80/10/2004-ST dated 17-9-2004:
Extension of service tax on air travel agents and rail travel agents to other
travel agents
"At present, service tax is leviable on air travel agents and rail travel
agents. Travel agents of other modes of transport (road, water) are not covered
under service tax. The scope of service tax has been extended to include all
travel agents. The taxable service is the service provided by travel agent in
relation to the booking of passage for travel by modes other than air and road."
Value of Taxable Service
W.e.f. 1.3.2008, taxable service provided by a person located outside India, in
relation to booking of an accommodation in a hotel located in India for a
customer located outside India has been exempted from levy of service tax vide
Notification No. 14/2008-ST dated 1.3.2008. However, if a travel agent is in
India, it will attract service tax. Even when service receiver is in India,
service tax would be payable.
Specific Exemption
Taxable services provided outside India for booking hotel accommodation in India
for a customer located outside India is exempt from service tax vide
Notification No. 14/2008-ST dated 1-3-2008.
Person Liable
Every travel agent providing taxable services to any person shall be liable to
pay service tax and shall be treated as an assessee for service tax purposes.
By: Dr. Sanjiv Agarwal
Dated: - November 25, 2011
Service tax has been imposed on travel agent's services rendered by any travel
agent by the Finance Act, 2004 with effect from 10th September, 2004. The gross
amount charged to or total consideration received from any person in relation to
services connected to booking of passage for travel is chargeable to service
tax, i.e. services provided by travel agent to any customer. However, services
related to air travel agents and rail travel agents are not covered in this
category.
Meaning of Travel Agent
Section 65(115a) defines `travel agent' as under —
"travel agent means any person engaged in providing any service connected with
booking of passage for travel, but does not include air travel agent and rail
travel agent".
The above definition is a specific and exclusive definition of travel agency
according to which –
(a) travel agent may be any person (i.e. individual, firm, company, commercial
concern, etc.)
(b) he must be engaged in providing a service.
(c) the said service must be any service connected with booking of passage for
travel.
(d) booking of passage for travel can be by any mode of transport except air and
railways.
(e) travel agent does not include —
(i) air travel agent
(ii) rail travel agent
Booking of passage for travel would include ticketing or arranging or organizing
the travel passage.
Taxable Service
Section 65(105)(zzx) defines `taxable service' as under —
"any service provided or to be provided to any person, by a travel agent, in
relation to booking of passage for travel".
The services rendered by travel agents/agency shall be taxable to service tax
when provided to a customer and when the services so provided relate to booking
of passage for travel. The booking should be for passage leading to undertake a
journey by travelling.
Taxable services should satisfy the following conditions —
(a) services should be provided to a customer, (upto 15-5-2008) and to any
person (w.e.f. 16-5-2008).
(b) services should be provided by any person who is a travel agent.
(c) Services should be in relation to booking of passage by air.
(d) Service does not include services rendered by rail travel agents/air travel
agents.
Business auxiliary services are different from travel agent services which is a
distinct taxable service under section 65 (105) (zzx) of the Finance Act, 1994.
Travel agent means any person engaged in providing any service connected with
booking of passage for travel, but does not include air travel agent and rail
travel agent. Taxable service means any service provided or to be provided to
any person, by a travel agent, in relation to booking of passage for travel. On
the other hand, business auxiliary services [section 65 (12)] covers marketing,
sales promotion and other services including services rendered by commission
agents. In the instant case, querist is not a commission agent but a travel
agent and as such, he shall be liable to Service Tax under travel agency
services.
Replacement of `customer' with `any person'
Finance Act, 2008 has substituted the words `any person' for the word `customer'
w.e.f. 16.5.2008 as the service tax is levied on service and status of recipient
of taxable services should not determine the tax treatment of a given service.
In Sharma Transports v. CC, CE & ST (Appeals), 2009 -TMI - 34216 - CESTAT,
BANGALORE, it was held that assessee's selling of passenger tickets as an agent
and receiving commission is covered as travel agent's service and not as
business auxiliary service.
Travel agents providing services of booking of passage by road, boats, steamer,
fiery, sea cruise etc. shall be covered for service tax. Agents booking
conducted tours will also be covered.
Departmental Clarification
CBEC has clarified as follows vide Circular No. 80/10/2004-ST dated 17-9-2004:
Extension of service tax on air travel agents and rail travel agents to other
travel agents
"At present, service tax is leviable on air travel agents and rail travel
agents. Travel agents of other modes of transport (road, water) are not covered
under service tax. The scope of service tax has been extended to include all
travel agents. The taxable service is the service provided by travel agent in
relation to the booking of passage for travel by modes other than air and road."
Value of Taxable Service
W.e.f. 1.3.2008, taxable service provided by a person located outside India, in
relation to booking of an accommodation in a hotel located in India for a
customer located outside India has been exempted from levy of service tax vide
Notification No. 14/2008-ST dated 1.3.2008. However, if a travel agent is in
India, it will attract service tax. Even when service receiver is in India,
service tax would be payable.
Specific Exemption
Taxable services provided outside India for booking hotel accommodation in India
for a customer located outside India is exempt from service tax vide
Notification No. 14/2008-ST dated 1-3-2008.
Person Liable
Every travel agent providing taxable services to any person shall be liable to
pay service tax and shall be treated as an assessee for service tax purposes.
By: Dr. Sanjiv Agarwal
Dated: - November 25, 2011
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