Make My Trip, A Facilitator Between Hotel And Customer, Entitled To Claim Benefit Of Abatement Notifications: CESTAT

The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that Make My Trip acted as a facilitator between hotel and customer for short-term accommodation service.

The bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) has observed that a tour operator can provide a host of services, including booking of accommodation, transportation, and food facilities. However, when a person is otherwise qualified as a tour operator but provides only booking of accommodation services, then such a tour operator would be entitled to ninety per cent abatement.

The appellant/assessee is an Indian online travel company that owns an online platform named "makemytrip.com, which allows customers to book hotel rooms, flight bookings, train bookings, and bus tickets through its website application. It registered itself with the Service Tax Department for the provision of air travel agent services and tour operator services.

In the “User Agreement entered between the appellant and the customer, it has been mentioned that the appellant always acts as a facilitator between the customer (user) and the hotels, and the liability of the appellant is restricted to providing confirmed bookings through its online portal.

During the relevant period, the appellant discharged the service tax liability on the entire amount received from the customers (which is inclusive of taxes) under the category of „tour operator services‟ by availing the benefit of abatement of 90 per cent under notification dated 01.03.2006 (till 30.06.2012) and under notification dated 20.06.2012 (w.e.f. 01.07.2012).

The department contended that the appellant is providing short-term accommodation service and not tour operator service, and, therefore, the demand under Section 73 of the Finance Act has been confirmed under this head. It has, therefore, to be determined whether the appellant is providing short-term accommodation or not.

The appellant contended that by providing booking of hotel rooms service to the hotel/customers through the online portal, the appellant merely acted as a facilitator between the hotel and the customers, for which the appellant received the commission. It cannot be argued that the appellant rendered hotel accommodation service to the customers. In fact, the appellant only provided access to an online platform to the customer for ease of booking a hotel, charged commission on the hotel for the same, and paid service tax on such commission. A customer accesses the appellant's online portal, books the hotel room as per his preference, and makes payment for the same along with a nominal convenience fee. Out of the total amount received by the appellant from the customer, the appellant retains only its commission and service fee (if any), and the balance amount is forwarded to the hotel. Thus, the amount charged by the appellant to the customer for providing access to the hotel option is only the commission and service fee.

The appellant contended that the appellant cannot provide the service of short-term accommodation to the customers in the absence of the requisite licences and infrastructure, and, therefore, the appellant cannot be said to be a hotel.

The tribunal held that the appellant is a tour operator and would be entitled to claim abatement under the Abatement Notifications.

Counsel For Appellant: V. Lakshmikumaran

Counsel For Respondent: Mihir Ranjan

Case Title: M/s Make My Trip (India) Private Limited Versus Additional Director General, Directorate General of GST Intelligence

Case No.: Service Tax Appeal No. 51844 Of 2021

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