You will be having a set of guidelines giving the details of the service taxes as applicable and deductible at the rates as applicable for various services.

If the package covers the air travel, room booking and conveyance, then the service tax charged may be at uniform rate, but if you charge separately for each service, you may safely deduct the taxes as per provisions of law individually on the bills generated.

This depends on the practical situation, hence you may refer to previous deductions which my be available in the files for further guidance.

1) the value of taxable service for tour operator is gross amount charged by him from customer in relation to tour and includes accommodation charges, food and any related facilities provided by him with regards to tour package.

2) in your case service tax would be on Rs 4000 charged for organising aqaccomodation , airport transfers

3) Air travel agent’s service is taxable service. He is required to charge service tax on bill

4) Taxable value of services for air travel agent is amount charged in bill excluding air fare but including commission received by air travel agent in relation to the booking

5) as per CBEC Circular No. 80/10/2004 ST dt. 17.09.2004 ) . air fare should not be included while calculating service tax.

6) for air travel agent for Domestic booking service tax is : 0.70% of basic fare

1) you must submit detailed reply to service tax department

2) deny your liability to pay service tax on total package @3.5%

3) mention that customer had only booked air tickets on X date . as such service tax was charged based on commission to received by you in relation to the booking

4) for second booking done on subsequent date for Rs 4000 you have recovered 3.5%service tax on the tour package

5) contact a local CA

If you do not want to lose your client as well as business and also have to answer the government machinery with the taxes issue, you may have to bear the losses for this case out of your pocket or profit.

Te given situation do not require any argument with the authorities because it is very clear from the rules that you have to pay the service tax as applicable and there is no question of denial of the same at any stage.

Or you should not have combined two different services under one umbrella.

You are a better judge of the situation hence decide wisely instead of looking only for legal solutions to this.