Tribunal upholds CRS services classification for Air Travel Agents, limits service tax demand to normal period

The Tribunal upheld the classification of CRS services under Business Auxiliary Services for a company providing Air Travel Agents Services. Despite conflicting views on the levy of service tax on incentives received for CRS services, the appellant was held liable to pay service tax. However, due to the unclear nature of the issue, suppression of facts for tax evasion couldn't be proven, leading to the restriction of the service tax demand to the normal period and setting aside of the penalty under Section 78.

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Issues: Classification of CRS service under Business Auxiliary Services, Suppression of facts for levy of service tax, Extended period of limitation for service tax demand, Imposition of penalty under Section 78.

Classification of CRS service under Business Auxiliary Services:
The appellant provided Air Travel Agents Services using Computerized Reservation Systems (CRS) of two companies, receiving incentives from them. The department classified the services under Business Auxiliary Services, leading to a service tax demand. The Commissioner (Appeals) upheld the demand. The appellant argued that there were divergent views on the levy of service tax on incentives received for CRS services. The Tribunal noted conflicting decisions but held that the appellant is liable to pay service tax under Business Auxiliary Services. However, since the issue was not free from doubt, suppression of facts for tax evasion couldn't be established, and the extended period of limitation for tax demand was not justified. The demand for service tax was restricted to the normal period, and the penalty under Section 78 was set aside.

Suppression of facts for levy of service tax:
The appellant contended that due to conflicting views on the levy of service tax on incentives received for CRS services, suppression of facts couldn't be proven. The Tribunal agreed, stating that since the issue was not clear, the appellant couldn't be accused of suppressing facts to evade service tax payment. Consequently, the imposition of penalty under Section 78 was deemed unsustainable.

Extended period of limitation for service tax demand:
The Tribunal found that the issue of levy of service tax on CRS services was not free from doubt, as indicated by divergent views in previous cases. Therefore, the extended period of limitation invoked for confirming the service tax demand was deemed unjustified. The demand for service tax liability was restricted to the normal period, and the penalty under Section 78 was set aside.

Imposition of penalty under Section 78:
The Tribunal set aside the penalty imposed under Section 78 due to the lack of suppression of facts by the appellant and the absence of justification for invoking the extended period of limitation for the service tax demand. The appeal was allowed, confirming the service tax demand under the normal period and disposing of the case accordingly.

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