ST_ProfilesTOUR OPERATOR

Date of Introduction: 01.09.1997 vide Notification No. 37/97-ST dt.22.08.1997.

“Tour Operator” means any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988 (59 of 1988) or the Rules made there under. (Section 65(78) of the Finance Act, 1994 as amended)

“Tour” means a journey from one place to another irrespective of the distance between such places. (Section 65(76) of the Finance Act, 1994 as amended)

“Tourist Vehicle” has the meaning assigned to it in clause (43) of Section 2 of the Motor Vehicles Act, 1988 (59 of 1988). The same is cited hereunder:

“Tourist Vehicle’ means a contract carriage constructed or adapted and equipped and maintained in accordance with such specifications as may be prescribed in this behalf.

(Section 65(77) of the Finance Act, 1994 as amended) Section 2(7) of the Motor Vehicle Act defines a ‘Contract Carriage’ as follows: “`Contract Carriage’ means a motor vehicle which carries a passenger or passengers for hire or reward and is engaged under a contract, whether express or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorised by him in this behalf on a fixed or an agreed rate or sum-

a) on a time basis, whether or not with reference to any route or distance; or b) from one point to another; and in either case, without stopping to pick up or set down passengers not included in the contract anywhere during the journey, and includes:

i.	a maxi-cab; and
ii.	a motor-cab not-withstanding that separate fares are charged for its passengers.

Taxable service means any service provided to any person, by a tour operator in relation to a tour. (Section 65(72) (n) of the Finance Act, 1994 as amended)

The revised definition of “Tour Operator” as above was notified with effect from 16.10.98. With this change “non-permit holders” who operate as tour operator by using tourist vehicle, which may have been leased or hired from persons who hold tourist permits are also covered under the definition of tour operator and liable to pay Service Tax.

The value of taxable service shall be the gross amount charged by the service provider for such service rendered by him. (Section 67 of The Finance Act, 1994 as amended)

1. The services provided by Tour Operators were exempted from payment of Service Tax upto 31.03.2000 by virtue of Notification No.52/98-ST dt.18.07.1998. However, since this notification has not been renewed; the services of tour operators have again become liable to Service Tax w.e.f. 01.04.2000.

2. The service provided by tour operator to the United Nation or an International Organization is exempted from payment of Service Tax. “International Organization” means an international organization declared by the Central Government in pursuance of Section 3 of the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), to which the provisions of the scheduled to the said Act apply, vide notification no. 48/98-ST dt.24.04.1998.

3. Service provided by the tour operator to the specified Diplomatic Missions is exempted from Service Tax vide Notification No.50/98-ST dt. 15.06.1998.

4. Service provided by the tour operator is exempted from so much of the Service Tax levy-able on such operator, as is in excess of the amount of Service Tax calculated on forty per cent of the gross amount charged from any person by such operator for the services provided in relation to a tour, where the tour operator provides a package tour to any person and the bill issued for this purpose indicates that it is inclusive of charges for such a tour. (Notification No.39/97-ST dt.22.08.1997)

‘Package Tour’ means a tour in which provisions for transportation and accommodation for stay of the person undertaking the tour has been afforded by the tour operator.

5. Abatement for Service Tax on tour operator is available when cost of accommodation is included in value of taxable service. Under Notification No.40/97-ST datd.22.08.1997 there is another provisions for partial exemption from Service Tax liability on the gross value of taxable service in excess of 10% of such taxable amount charged by the operator in relation to tour. This is subject to the condition that :

Service Tax on Tour Operator on tours abroad Service Tax on services rendered by Tour Operator is only on Services rendered in India in respect of a tour within Indian Territory. Services rendered by tour operators in respect of out-bound tourism i.e. for tours abroad, do not attract Service Tax. In case of a composite tour, which combines tours within India and also outside India, Service Tax will be leviable only on services rendered for tours within India provided that separate billing has been done by the tour operator for services provided in respect of tours within India.

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