2023 (12) TMI 911 - AT - Service Tax

Travel agent incentives from airlines ruled as air travel services not business auxiliary service

M/s. Modiline Travel Services Pvt. Ltd. Versus Commissioner of Service Tax, Delhi-II

CESTAT New Delhi allowed the appeal, setting aside the Commissioner's order demanding service tax under business auxiliary service (BAS) on various ... Non-payment of service tax - business auxiliary service - incentives received from the Central Reservation System Companies (CRS) Companies and Airlines on the sale of tickets - service charges received by the appellant from clients for visa consultation - incentives received from medi-claim insurance companies - incentives received from Foreign Exchange brokers - incentives received from Miscellaneous Receipts - Denial of CENVAT credit on the ground that invoices bear address as 1400, Modi Tower, 98, Nehru Place, New Delhi. Non-payment of service tax under BAS on the incentives received from the CRS Companies and Airlines on sale of tickets - HELD THAT:- This issue has been decided in favour of the appellant by a Larger Bench of the Tribunal in KAFILA HOSPITALITY & TRAVELS PVT. LTD. VERSUS COMMISSIONER, SERVICE TAX, DELHI [2021 (3) TMI 773 - CESTAT NEW DELHI (LB)]. The Larger Bench held that by rendering services connected to travel by air, a travel agent would render ‘air travel agent’ services, which services cannot be said to be for ‘promotion or marketing’ for the airlines - in view of the aforesaid decision of the Larger Bench of the Tribunal in Kafila Hospitality, service tax could not have been demanded from the appellant under BAS on the incentives that were received from CRS Companies and Air Lines on sale of tickets. Non-payment of service tax under BAS on the service charges received by the appellant from clients for visa consultation - HELD THAT:- The services rendered by the appellant are not covered under the definition of BAS as the appellant is not involved in promotion and marketing or sale of any goods or service nor is the appellant providing any customer care service on behalf of the client or procuring goods or services which are inputs for the client. While providing such services, the appellant does not act as an agent of the embassies or of the individuals who require the assistance in obtaining VISA and, therefore, such services are not provided on behalf of anyone. The activities of the appellant would not be covered under BAS - service tax could not have been demanded from the appellant under BAS on the service charges received by the appellant from clients for visa consultation. Non-payment of service tax under BAS on the incentives received from Mediclaim Insurance Companies - HELD THAT:- The Insurance Companies provide the mediclaim insurance policies to the individuals. The Insurance Companies make payment of incentives on their own as per their policy on which the appellant has no control. The appellant merely receives incentives from the insurance companies and does not raise any invoice on the Insurance Company. The liability to pay service tax on commission paid to agents is on Insurance Company. The appellant is not involved in promotion or marketing or sale of any goods or service and the appellant is also not providing any customer care service on behalf of the client or procuring goods or services for the clients. The activities of the appellant would, therefore, not be covered under BAS. Non-payment of service tax under BAS on the incentives received from Foreign Exchange brokers - HELD THAT:- The appellant is not an authorized money changer as per the Reserve Bank of India requirement. Thus, for the Foreign Exchange required by the passenger, the payment is made directly by the passenger in the name of authorized money changer. The authorized money changer makes payment of incentive on its own to the appellant as per their policy and market rates of Foreign Exchange from time to time. The appellant does not raise any invoice on the authorized money changer. The appellant is not involved in promotion or marketing or sale of any goods or services nor is the appellant providing any customer care service on behalf of the client or procuring goods or services for the client. The client or the service recipient are the Foreign Exchange brokers who pay for the service - The reasons given by the Commissioner (Appeals) for confirming the demand on the incentives received by the appellant from Foreign Exchange brokers is the same as that for confirmation of the demand on service charges received by the appellant from clients for Visa Consultation. The confirmation of this demand, therefore, would also have to be set aside. Non-payment of service tax under the category BAS on the incentives received from Miscellaneous Receipts - HELD THAT:- According to the learned counsel for the appellant, the appellant is not involved in promotion or marketing or sale of any goods or service - There is force in the submission advanced by the learned counsel for the appellant. When the aforesaid services have already been taxed under ‘air travel agency’ service, the incentives received from Miscellaneous Receipts arising out of the same transaction cannot be taxed under BAS. The confirmation of demand, therefore, deserves to be set and is set aside. Denial of CENVAT credit - Credit denied on the ground that invoices bare address as 1400, Modi Tower, 98 Nehru Place which is the address of the registered premises and not 110, Modi Tower, 98 Nehru Place which is the address of the travel agency division of the appellant specified in ST-2 form - HELD THAT:- There is no dispute on receipt of service and payment made. According to the appellant, the issue of PAN based registration has been decided in favour of the appellant meaning thereby that registration of the service provider is not in dispute. Thus, once registration of service provider and rendition of service and payment thereof is not in dispute, mere mention of the wrong address is a procedural defect and CENVAT credit cannot be denied for this reason - The appellant was, therefore, clearly entitled to CENVAT credit and it could not have been denied merely on the ground of procedural lapses. The impugned order dated 28.11.2016 passed by the Commissioner (Appeals) cannot be sustained and is set aside - Appeal allowed. Issues Involved:1. Non-payment of service tax under 'business auxiliary service' (BAS) on incentives received from Central Reservation System (CRS) Companies and Airlines.2. Non-payment of service tax under BAS on service charges received for visa consultation.3. Non-payment of service tax under BAS on incentives received from Mediclaim Insurance Companies.4. Non-payment of service tax under BAS on incentives received from Foreign Exchange brokers.5. Non-payment of service tax under BAS on incentives received from Miscellaneous Receipts.6. Denial of CENVAT credit due to incorrect address on invoices.Summary:First Issue:The issue concerns non-payment of service tax under BAS on incentives received from CRS Companies and Airlines on ticket sales. The Tribunal referred to the Larger Bench decision in *Kafila Hospitality & Travels Pvt. Ltd. vs. Commissioner, Service Tax, Delhi*, which held that travel agents rendering air travel services are not promoting or marketing for airlines or CRS Companies. Consequently, the incentives received are not taxable under BAS.Second Issue:This issue pertains to non-payment of service tax under BAS on service charges for visa consultation. The Tribunal found that the appellant's services do not fall under BAS as they do not involve promotion, marketing, or customer care services on behalf of any client. The Tribunal cited *Good Wind Travels Pvt. Ltd. vs. Commissioner of C. Ex., Ahmedabad*, which held that such services are not taxable.Third Issue:The issue involves non-payment of service tax under BAS on incentives from Mediclaim Insurance Companies. The Tribunal concluded that the appellant's activities do not fall under any BAS clauses, as they merely receive incentives from insurance companies without engaging in promotional activities. The Tribunal set aside the demand based on similar reasoning applied to visa consultation services.Fourth Issue:This issue relates to non-payment of service tax under BAS on incentives from Foreign Exchange brokers. The Tribunal found that the appellant's activities do not fall under BAS, as the appellant does not promote or market goods or services. The demand was set aside based on the same reasoning applied to visa consultation services.Fifth Issue:The issue concerns non-payment of service tax under BAS on incentives from Miscellaneous Receipts, including railway tickets, CRS Companies, and hotel accommodation. The Tribunal agreed with the appellant that these services, already taxed under 'air travel agency' service, cannot be taxed again under BAS. The demand was set aside.Sixth Issue:This issue involves the denial of CENVAT credit due to incorrect address on invoices. The Tribunal held that mere mention of a wrong address is a procedural defect and not a valid ground to deny CENVAT credit, as long as the receipt of services and payment are not in dispute. The Tribunal cited *Toll (I) Logistics Pvt. Ltd. vs. Commissioner of Central Excise, Pune-I* to support its decision.Conclusion:The impugned order dated 28.11.2016 passed by the Commissioner (Appeals) was set aside, and the appeal was allowed.