Appellant Liable for Service Tax on Incentives & Remuneration, Penalties Waived

The Tribunal held that the appellant is liable to pay service tax on incentives received for using AMADEUS systems and on remuneration/commission from insurance companies. However, penalties were set aside. Regarding CENVAT credit, the appellant exceeded the permissible limit for common inputs, leading to a demand for service tax and interest. Penalties were set aside, but the demand was upheld. The appeals were partly allowed with penalties being waived but the service tax and interest demands being maintained.

---

---

Issues:
1. Liability to pay service tax on incentive received for using AMADEUS systems
2. Liability to pay service tax on remuneration/commission received from insurance companies
3. Eligibility to avail CENVAT credit for the period from October 2006 to January 2008 or whether the demand is hit by limitation

Analysis:

Issue 1: Liability to pay service tax on incentive received for using AMADEUS systems
The appellant argued that they were not promoting the business of AMADEUS and, therefore, should not be liable for service tax. However, the Tribunal, citing a previous case, held that the appellant is indeed liable to pay service tax on the incentive received. Despite the appellant's belief, the penalties were set aside considering the ongoing litigation and the appellant's bonafide belief.

Issue 2: Liability to pay service tax on remuneration/commission received from insurance companies
The appellant contended that they believed the commission from insurance companies was taxable only if received by an insurance agent. However, the Tribunal ruled that the appellant is liable to pay service tax on this commission. The penalties were set aside due to the interpretational nature of the issue and clarifications issued by the Board.

Issue 3: Eligibility to avail CENVAT credit
The appellant availed credit on common inputs used for both taxable and non-taxable services, exceeding the permissible limit. The Tribunal held that the appellant should have utilized only 20% of the credit on common input services for non-taxable services. The penalties were set aside, but the demand for service tax and interest was upheld. The argument of no suppression of facts was rejected, and the extended period for demand was deemed valid.

In conclusion, the penalties were set aside for all three issues, but the demand for service tax and interest was maintained. The appeals were partly allowed based on the above terms.

---