Section 65B (44) provides the definition of service as any activity carried out by a person for another for a consideration. The scope of the definition is very wide so as to cover wide range of activities under its ambit.
By virtue of section 65B (44), any activity done for a consideration will be considered as a service. Therefore, services of a Travel Agent will be considered as a taxable service.
Services shall be taxable when the services are provided by a travel agent to any person in relation to the booking of passage of travel.
Such codes are no longer statutory but used for statistical purpose for the purpose of registration and for payment of tax as specified vide Circular No.165/16/2012 –ST dated 20.11.2012:
Tax Collection of Service
Interest and penalties on such service
Provision relating to Negative List
Travel Agent services are not included in the Negative List. Therefore, service tax is payable on service of booking of passage of travel.
Provisions relating to exemptions
Small Service Provider
Vide Notification No 33/2012-ST, dated 20.06.2012 – Exemption to Small service providers having taxable turnover of less than 10 Lakhs and providing services other than by way of under a brand name.
Import of Technology
Vide Notification No. 14/ 2012-ST, dated March 17, 2012 – Exemption in respect of Taxable service involving import of technology, from so much of service tax, as is equivalent to the extent of amount of R&D Cess payable on the said transfer of technology under the provisions of section 3 of the Research and Development Cess Act, 1986.
To Foreign Diplomatic missions and their personnel
Vide Notification No 27/2012-ST, dated 20.06.2012 – Exemption for all the taxable services provided by any person, for the official use of a foreign diplomatic mission or consular post in India, or for personal use or for the use of the family members of diplomatic agents or career consular officers posted therein.
Services by TBI or STEP
Vide Notification No 32/2012-ST, dated 20.06.2012 – All taxable services provided by TBI or STEP have been exempted
Services provided to SEZ
Vide Notification No 40/2012-ST, dated 20.06.2012, all taxable services received by a Unit located in a Special Economic Zone (SEZ) or Developer of SEZ for the authorized operations, has been exempted from the levy of whole of the service tax.
Vide Notification No. 25/2012, the following exemption is available:
Clause 42 – Services provided by a tour operator to a foreign tourist in relation to a tour conducted wholly outside India.
Provisions relating to Valuation and Abatement
Section 67 read along with Service Tax (Determination of Value) Rules, 2006 provides the manner of determining the value of taxable services on which service tax should be levied.
In respect of Travel Agent services, no specific provision for determination of taxable value has been provided. However it has been clarified that the value of taxable services is the total amount of consideration consisting of all components of the taxable service and it is immaterial that the details of individual components of the total consideration are indicated separately in the invoice. Thus, the value of taxable Travel Agent services is to be determined in terms of provision of Section 67 read with the prescribed rules.
Vide Circular No. 80/10/2004-ST, dated 17.09.2004 it has been clarified that the value of taxable services would be the commission/ fee charged by the travel agent from the customer.
No abatement has been granted to any person liable to pay service tax under the Section
Provisions relating to Cenvat Credit
The Cenvat Credit Rules, 2004 provides for availment of credit of excise duty paid on inputs and capital goods and service tax paid on input services. The words ‘capital goods’, ‘inputs’ and ‘input service’ are defined respectively in rule 2(a), 2(k) and 2(l). The credit is available to the manufacturer or service provider for the duty or tax paid on the above items.
Provisions relating to point of taxation
The point of taxation in case of travel agent services will be governed by Rule 3 of Point of Taxation Rules, 2011. As per the said rules, the Point of Taxation will be the date of issue of invoice or the date of receipt of payment, whichever is earlier. In case the invoice is not issued within 30 days of booking (provision of service), the date of booking will be the point of taxation.
Provisions relating to reverse charge
Travel Agent services are not included under the mechanism of Reverse Charge. Hence, service provider will be the person liable to pay service tax.