Air travel agent valuation under Rule 6(7) excludes airline incentives from taxable consideration under the special service tax scheme.

Where an air travel agent opts to discharge service tax under Rule 6(7) of the Service Tax Rules, 1994 on the prescribed basic fare, the taxable value is confined to that valuation basis. Airline incentives received by the agent are not separately includible as consideration for tax computation under the special scheme. The Tribunal upheld the original adjudication accepting the appellant's valuation method, set aside the contrary appellate order, and confirmed that the incentives did not form part of the taxable consideration.

---

---

Issues: Whether, for an air travel agent paying service tax under Rule 6(7) of the Service Tax Rules, 1994 on the prescribed basic fare, the incentive received from airlines was includible in the taxable consideration.

Analysis: The appellant was registered as an air travel agent and had discharged service tax liability under the special option available under Rule 6(7). The dispute was whether incentives received from airlines formed part of the consideration for assessment. The original authority had accepted the appellant's method of payment under the special scheme, while the appellate authority had taken a different view. The Tribunal found the original authority's view to be sustainable in law and held that the tax liability was to be computed under the chosen valuation option on the basic fare contemplated by the rule.

Conclusion: The incentive received from airlines was not required to be added to the taxable consideration under Rule 6(7), and the appellant succeeded.

Final Conclusion: The impugned appellate order was set aside and the original adjudication restoring the appellant's valuation method was upheld.

Ratio Decidendi: Where service tax is discharged by an air travel agent under the special valuation option in Rule 6(7), the taxable value is confined to the prescribed basis under that rule and airline incentives are not separately includible as consideration.

---