Tribunal allows appeal, permits adjustment of service tax on cancelled air tickets, and exempts visa arrangement charges.

The tribunal ruled in favor of the appellant on all three points of dispute, allowing the appeal and setting aside the impugned order. The appellant was permitted to adjust service tax on cancelled air tickets, as no commission was received, and no unjust enrichment occurred. Charges for arranging visas were deemed not taxable under Business Auxiliary Service. Service tax on cancellation charges retained by the air travel agent was also held to be not payable, given the absence of commission from airlines and exemption notification provisions.

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Issues:
1. Adjustment of service tax on cancelled air tickets.
2. Taxability of charges for arranging visas under Business Auxiliary Service.
3. Service tax on cancellation charges retained by the air travel agent.

Analysis:
1. Adjustment of Service Tax on Cancelled Air Tickets:
The appellant, an air travel agent, opted to discharge service tax liability under Rule 6(7) of the Service Tax Rules during the period of dispute. The first issue was whether service tax paid and collected from clients could be adjusted for payment when air tickets were cancelled, and no commission was received. The appellant argued for suo moto adjustment citing a Punjab & Haryana High Court judgment allowing such adjustments due to no unjust enrichment. The tribunal agreed with the appellant, holding that adjustment was permissible in such cases, and the impugned order was not sustainable.

2. Taxability of Charges for Arranging Visas:
The second issue revolved around whether charges for arranging visas for clients were taxable under Business Auxiliary Service. The appellant contended that this activity did not fall under any clause of the definition of Business Auxiliary Service under Section 65(19) of the Finance Act, 1994. The tribunal concurred, ruling that the activity was not taxable under Business Auxiliary Service during the dispute period, leading to the demand for service tax on this amount being deemed unsustainable.

3. Service Tax on Cancellation Charges:
The final issue was the service tax liability on cancellation charges retained by the air travel agent. The appellant argued that since no commission was received from airlines for cancelled tickets, no service tax should be charged on these charges. Additionally, the appellant highlighted an exemption notification stating that amounts exceeding the commission received were exempt from service tax. The tribunal agreed with the appellant, holding that no service tax was payable on cancellation charges, and the impugned order was set aside, allowing the appeal.

In conclusion, the tribunal ruled in favor of the appellant on all three points of dispute, allowing the appeal and setting aside the impugned order.

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