Incentives for Air Travel Agents Using CRS Not Subject to Service Tax Under Section 65(19) of Finance Act 1994.

The Tribunal ruled in favor of the Appellant, an Air Travel Agent, determining that the incentive or commission received for using the Computer Reservation System (CRS) is not subject to service tax under section 65(19) of the Finance Act, 1994. The decision referenced a Larger Bench ruling in Kafila Hospitality & Travels Pvt. Ltd., which clarified that such incentives do not qualify as 'Business Auxiliary Service.' Consequently, the Tribunal set aside the previous orders and allowed the appeals, exempting the Appellant from the service tax liability on the incentives received.

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Issues involved:
The issue involved in this case is whether the incentive/commission received by the Appellant for using CRS service is subject to service tax or not.

Comprehensive Details:

1. The Appellant, an Air Travel Agent, receives commission from the airline for selling airline tickets through a Computer Reservation System (CRS) provided by service providers like Amadeus, Galileo, and Wordspan. The CRS provider enters into agreements with the airline and the travel agent to facilitate reservations through a computer system. The Appellant entered into an agreement with Galileo India Pvt. Ltd., through Amex, to use their advanced computerized reservation system. The service tax department issued show cause notices to the Appellant, claiming that the incentive/commission received qualifies as 'Business Auxiliary Service' and is liable for service tax under section 65(19) of the Finance Act, 1994.

2. The Appellant argued that the issue has been settled by a Larger Bench decision in the case of Kafila Hospitality & Travels Pvt. Ltd., followed by this Tribunal in Asveen Air Travels (P) Ltd. The Appellant contended that the incentive/commission received is not subject to service tax based on the interpretation of relevant laws and precedents.

3. After hearing both parties, the Tribunal considered the submissions and referred to the decision of the Larger Bench in Kafila Hospitality & Travels Pvt. Ltd. The Tribunal observed that the incentive received by the Appellant for using the CRS service is not liable for service tax under section 65(19) of the Finance Act, 1994. The Tribunal set aside the impugned orders and allowed the appeals in favor of the Appellant.

This summary provides a detailed overview of the legal judgment, highlighting the issues involved and the Tribunal's decision based on the interpretation of relevant laws and precedents.

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