GST ON HOTEL BOOKING SERVICES BY TOUR OPERATORS: AAR DELHI CLARIFIES LIABILITY OF TUI INDIA PRIVATE LIMITED
DELHI AUTHORITY FOR ADVANCE RULING
GOODS AND SERVICE TAX
Case Title: M/s TUI India Private Limited
(GST AAR DELHI)
Advance Ruling No.- 09/DAAR/2018 dated 28.06.2019
In Application No. 09/DAAR/2018 dated 05.02.2018
Date of Judgement/Order: 28th June 2019
IMPORTANT PARAGRAPHS
Para No. 1. The applicant, M/s. TUI India Private Limited is mainly engaged in the business of outbound tours. The applicant specializes in package tours, air tickets, rail tickets, accommodation, transport, visa and tailor made holidays for tourists visiting overseas and within india. The applicant provides a combination of these services or single service, as per the client’s requirement. It provides services to both B2B and B2C clients.
Question No. 1: ‘Accommodation Only’ services:
Para No. 2. The applicant has entered into contracts with various online / offline players (Hotel Aggregators) for buying hotel rooms. The applicant, amongst other tour services, also provides Hotel only (Accommodation Only) services to B2B Agents i.e. other travel agents & tour operators (B2B Clients). The applicant does online booking of Hotel Rooms from the Hotel Aggregators as per its client’s requirements & makes payments for the same on behalf of the B2B Clients.
Para No. 52. From the above, it is clear that the applicant is engaged in rendering services of booking of hotel accommodation. The consideration for rendering such services is partly received from the Indian clients as service fee / convenience fee and partly received from the foreign Hotel aggregator as target based sales commission. The applicant has not disputed their liability to pay GST @ 18% on all such amounts whether received from the clients or from the Hotel Aggregators.
Para No. 54. As far as the third issue is concerned, i.e. whether GST is payable on the amount received by the applicant from the clients as pure agent and is paid by them to the foreign hotel / hotel aggregator, it is seen that in respect of such services, the applicant is covered in the definition of “Agent”, ‘supplier’ and ‘Taxable Person’ under sections 2(5), 2(105) and 2(107) respectively of CGST Act, 2017. Hence, any liability to pay GST on such amount has to be discharged by the applicant.
RULING
Para No. 62. The applicant is supplying booking of hotel accommodation services. They are admittedly paying GST @ 18% (9% CGST + 9% SGST) on service fee / convenience fee / commission received from clients and also on target based sales commission received from the foreign hotel aggregators (DOTW). The value of ‘hotel accommodation’ paid by the client to them, which is remitted by them to the foreign hotel / hotel aggregator cannot be included in such taxable value, provided the conditions of pure agent are satisfied.
Para No. 63. The applicant is required to collect / deposit GST under Section 9(1) of the CGST Act, 2017 on the amount received by them from the clients on the value of ‘hotel accommodation’ service, while acting as an agent under Section 2(5) of the said Act being “taxable person” defined under Section 2(107) of the said Act and “supplier” defined under section 2(105) of the said Act.
Para No. 64. The ‘tour operators services’ are covered under entry (i) of S. No. 23 of Notification No. 11/2017 – Central Tax (Rate) dated 28.06.2017 and they are required to pay GST @ 5% (2.5% CGST + 2.5% SGST) (without ITC) subject to fulfilment of conditions and they are not covered under entry (ii) of the S. No. 23 of the said Notification before 25.01.2018 and entry (iii) of S. No. 23 of the said Notification from 25.01.2018 and hence option to pay GST @ 18% (9% CGST + 9% SGST) (with ITC) is not available to them.
