Service Tax Applicable to Air Travel Agents Using Galileo Software

The Tribunal held that the income received by IATA accredited air travel agents from M/s.Galileo India Pvt. Ltd. for using 'Computer Reservation System - Galileo Software' is subject to service tax under Business Auxiliary Service. While the income was deemed taxable, the penalty imposed on the appellants was waived due to the absence of intentional suppression of facts. The Tribunal upheld the demand for service tax but set aside the penalties, citing lack of evidence supporting deliberate evasion of service tax.

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Issues:
1. Whether the income received by the appellants from M/s.Galileo India Pvt. Ltd. for using 'Computer Reservation System - Galileo Software' is subject to levy of service tax under Business Auxiliary Service.
2. Whether the show cause notice issued invoking an extended period can sustain due to suppression of facts.
3. Whether the penalty imposed on the appellants is justified.

Analysis:
1. The appellants, IATA accredited air travel agents, received income as an incentive from M/s.Galileo India Pvt. Ltd. for using 'Computer Reservation System - Galileo Software.' The department contended that this income is subject to service tax under Business Auxiliary Service. The appellants argued that they were merely subscribers to the software and not obligated to promote it, hence the incentive should not be taxable. The Tribunal referenced a similar case and held that the income received is indeed taxable. However, the Tribunal found no evidence of intentional suppression of facts by the appellants and considered their argument valid. Consequently, the penalty was waived under section 80 of the Finance Act, 1994.

2. The show cause notice was issued for the period from 2004-05 to 2007-08, dated 16.9.2008, invoking an extended period. The department alleged suppression of facts to evade service tax payment. The Tribunal noted that the issue of service tax liability for using the software had been previously litigated and decided in favor of taxation. However, the Tribunal found no proof of deliberate concealment of facts by the appellants. As a result, the penalty was waived based on the reasonable cause presented by the appellants.

3. The Commissioner (Appeals) had upheld the demand, interest, and penalty imposed on the appellants. The appellants challenged this decision before the Tribunal. The Tribunal, after considering the arguments from both sides, upheld the demand for service tax but set aside the penalties without disturbing the demand or interest. The Tribunal's decision was based on the lack of evidence supporting intentional evasion of service tax by the appellants, leading to the waiver of penalties under section 80 of the Finance Act, 1994.

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