2013 (8) TMI 20 - AT - Service Tax

Petitioner Liable for Service Tax on Business Auxiliary Services to M/s Amadeus India Pvt. Limited

The judgment upheld the liability of the petitioner for service tax, interest, and penalty related to providing Business Auxiliary Service to M/s Amadeus ... Stay - Service Tax as Business Auxiliary service – Computer Reservation System – Held that:- The petitioner is 'required under the. agreement with M/s Amadeus India to exclusively use only the Amadeus India provided software for connectivity employing the enabling hardware, also furnished by M/s Amadeus India. This interface/ synergy between the petitioner and M/s Amadeus India provides the petitioner travel agency access to a cosmos of connectivity for booking airline tickets, of several airlines in the world for beneficial employment in the core business of the petitioner which is a travel agent - The complementary benefit derived by M/s.Amadeus India is an expansion of its footprint in its core business, with airlines, with regard to booking of tickets of the airlines, by travel agents such as the petitioner - Commission received by the petitioner from M/s Amadeus for using its software and hardware falls under the category of Business Auxiliary Service – prima facie case against the Assessee. Period of Limitation – Stay Application - Case of wilful suppression or contravention of the provisions of Act with an intent to evade tax – Held that:- It is a matter to be considered at the final hearing Stay Application – Held that:- The liability of the petitioner for the period 2008-09, which falls within the normal period of limitation is determined to be ₹ 11,77,038/-, for the provision of Business Auxiliary Service and ₹ 10,191/- for having provided tour operator service – Petitioner to remits ₹ 11,87,000 /- representing the cumulative liability on the two taxable services for the period 2008-09, to the credit of Revenue within four weeks. Issues:1. Liability to service tax, interest, and penalty for providing Business Auxiliary Service.2. Interpretation of the nature of services provided to M/s Amadeus India.3. Applicability of Business Auxiliary Service tax on the commission received.4. Conflict in legal interpretation regarding the taxability of services provided.Issue 1: Liability to service tax, interest, and penalty for providing Business Auxiliary Service:The judgment involves a dispute regarding the liability of the petitioner for service tax, interest, and penalty arising from providing Business Auxiliary Service to M/s Amadeus India Pvt. Limited. The Commissioner (Appeals) confirmed the liability determined by the adjudication order passed by the Additional Commissioner, Service Tax, Delhi. The demand for service tax of Rs.23,19,378/- was based on the petitioner's provision of Business Auxiliary Service to promote the business of M/s Amadeus India as a Computer Reservation System provider. The petitioner, a travel agent, used the automated reservation system developed by M/s Amadeus India, receiving a commission for booking airline tickets through the software connectivity tool provided by M/s Amadeus India. The judgment discusses the legal aspects of this service provision and the imposition of liability.Issue 2: Interpretation of the nature of services provided to M/s Amadeus India:The judgment delves into the nature of services provided by the petitioner to M/s Amadeus India and whether it constitutes taxable Business Auxiliary Service. Proceedings were initiated based on the allegation that the petitioner's activities amounted to promoting services provided by M/s Amadeus India, invoking the extended period of limitation under the Finance Act, 1994. The petitioner claimed immunity from tax, arguing that it did not provide Business Auxiliary Service. However, both the adjudicating authority and the appellate authority rejected this claim, leading to a detailed analysis of the business relationship between the parties and the services rendered.Issue 3: Applicability of Business Auxiliary Service tax on the commission received:The judgment addresses the applicability of Business Auxiliary Service tax on the commission received by the petitioner from M/s Amadeus India for using the software connectivity tool. The petitioner's exclusive use of the software and hardware provided by M/s Amadeus India facilitated access to airline ticket bookings, benefiting both parties. The judgment analyzes whether the commission falls within the scope of Business Auxiliary Service provided by the petitioner to M/s Amadeus India, considering the symbiotic relationship and the benefits derived by both entities from the arrangement.Issue 4: Conflict in legal interpretation regarding the taxability of services provided:The judgment highlights a conflict in legal interpretation regarding the taxability of services provided, referencing previous orders and an interim order by the Tribunal. The orders from different Commissioners and the conflicting views within the Tribunal indicate an existing ambiguity in the legal position regarding the classification of the services rendered. The judgment acknowledges this ambiguity and opts for a prima facie analysis of the transaction while considering the potential for wilful suppression or contravention of tax provisions. The resolution of this conflict forms a crucial aspect of the judgment's analysis.This detailed analysis of the judgment provides insights into the legal intricacies surrounding the liability for service tax, the nature of services provided, the taxability of commissions received, and the existing conflicts in legal interpretation, offering a comprehensive overview of the case.