Commission for Amadeus Software deemed Business Auxiliary Service, not Air Travel Agents Service.

The Tribunal ruled that the commission received from Amadeus India Pvt. Ltd. for using Amadeus Software Systems falls under Business Auxiliary Service (BAS) and not Air Travel Agents Service (ATAS), denying exemption under Notification No.22/97-ST. The Tribunal rejected the appeal on taxability under BAS but exercised discretion to remove the penalty under Section 78 due to ongoing litigation, upholding the demand for service tax and interest. The appeal was partly allowed with modifications made by the Tribunal.

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Issues:
Liability of service tax under BAS for commission received from Amadeus India Pvt. Ltd. for using Amadeus Software Systems for International Air ticket booking for the period 2003-04 to 2004-05. Applicability of exemption under Notification No.22/97-ST. Limitation for issuing SCN in 2008.

Analysis:
1. The dispute revolves around the liability of service tax under the category of Business Auxiliary Service (BAS) on the commission received from Amadeus India Pvt. Ltd. for utilizing the Amadeus Software Systems for International Air ticket booking during 2003-04 to 2004-05. A show cause notice (SCN) proposing a demand of &8377; 37,260 was issued in 2008, confirmed by the original adjudicating authority with a penalty under Section 78 of the Finance Act, 1994. The lower appellate authority upheld this decision, leading to the current appeal.

2. The appellant's consultant argued that the commission should be treated under Air Travel Agents Service (ATAS) based on the judgment of the Hon'ble High Court of Madras in Airlines Agents Association case. The consultant highlighted that services are provided only to customers, hence the commission should be linked to ATAS, entitling them to exemption under Notification No.22/97-ST. The consultant also contested the limitation issue, referencing a Tribunal case where the appeal was allowed on limitation grounds.

3. The respondent's representative supported the impugned order and referred to a Tribunal decision confirming tax liability on similar services in a previous case.

4. Upon hearing both parties and examining the facts, the Tribunal analyzed the issue comprehensively.

5.1 The Tribunal noted that previous decisions established that the commission from Amadeus falls under BAS. The consultant's argument linking it to ATAS based on the Madras High Court judgment was deemed not applicable as the facts differed significantly.

5.2 The Tribunal emphasized the requirement for the appellant to use Amadeus as the exclusive Computer Reservation System, receiving a predetermined service fee/commission. This activity aligned with BAS's definition, specifically in promoting or marketing the client's services, rejecting the consultant's contention.

5.3 Consequently, the Tribunal rejected the appeal regarding the taxability of the commission under BAS.

5.4 Regarding the limitation plea, the Tribunal acknowledged the issue's discovery during an audit in 2007. Despite finding no merit in setting aside the plea based on limitation, the Tribunal exercised discretion to set aside the penalty under Section 78 due to the ongoing litigation.

6. The impugned order was modified to remove the penalty while upholding the demand for service tax and interest.

7. The appeal was partly allowed based on the modifications made by the Tribunal.

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