Tribunal upholds service tax on CRS commission & insurance income, waives penalties

The tribunal upheld the service tax demand on commission from CRS AMADEUS and income from insurance policies but waived penalties due to the appellants' genuine belief based on a Board circular. Charges for ticket delivery were deemed non-taxable as the appellants were not engaged in tour operator services. Income from airlines for ticket cancellations was also exempted based on precedent. The tribunal partly allowed the appeals, modifying the order accordingly.

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Issues: Classification of income received from insurance companies, classification of commission from CRS AMADEUS, charges for delivery of tickets, income from airlines for ticket cancellations.

Classification of income received from insurance companies:
The appellants, registered as IATA Air Travel Agents, received commission from insurance companies for arranging overseas mediclaim policies. The department contended that this income is subject to service tax under Business Auxiliary Service (BAS). The appellant argued that the commission should be classified as insurance auxiliary service, not BAS, citing a Board circular. The tribunal found that the commission promoted the business of insurance companies, falling rightly under BAS. However, considering the appellant's genuine belief based on the Board's clarification, the penalties imposed were set aside.

Classification of commission from CRS AMADEUS:
The commission received from CRS AMADEUS for booking air tickets was also challenged for service tax under BAS. The appellant acknowledged a precedent against them but argued that the issue was contentious and subject to interpretation. The tribunal agreed that the penalties on this count could not be sustained due to the prolonged interpretational dispute.

Charges for delivery of tickets:
The department imposed service tax on charges collected by the appellants for delivering tickets, considering it taxable under tour operator service. The appellants contended that they were not engaged in tour operator service, merely booking tickets for clients. The tribunal agreed, setting aside the demand on this count as there was no evidence of the appellants being involved in tour operator services.

Income from airlines for ticket cancellations:
The issue of income received from airlines for ticket cancellations was raised, with the appellant citing favorable decisions in their support. The tribunal followed the precedent and set aside the demand on this ground.

In conclusion, the tribunal modified the impugned order, sustaining the demand on AMADEUS software and commission for insurance policies but setting aside the penalties imposed. The demand regarding tour operator service charges and ticket cancellation income was also set aside. The appeals were partly allowed with consequential relief, if any.

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