TaxTMI 
TaxTMI 
2016 (8) TMI 89
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....ocated in India and operated airlines and have registration for discharge of Service Tax liability under the category of 'Transportation of Passengers', 'Cargo Handling Services', 'Transportation of Goods by Air'. Appellants offer sales of ticket and make reservation of seats on schedule flights through 2 different channels (1) through its branch offices located in different countries and (2) through Global Distribution System (GDS) platform provided by other companies operated facilities for "Computerized Reservation System" also located outside India viz. Galileo, USA, Abacus, Singapore, Amadeus, Spain and Sabre. This CRS companies facilitated the sale of products or services, appellant herein as to seat inventory in a specific flight by using an online computer system provided by these foreign based companies which are used by Travel Agents. Appellant's head offices entered into an agreement with the CRS companies for making payment to them on booking of tickets. The CRS companies raised invoice on the appellants for the tickets booked, based upon such agreement and bills are settled by head office of the appellants. After detailed investigation which was carried out, Revenue au....
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....e information to passengers/transport agent about availability of the flight or seats for travelling at the date chosen by such passengers. He would draw our attention to the agreement entered into by the head office of the appellant with CRS companies. After pointing out the relevant clause, he would submit that it no way stipulates "access or retrieval any data" from the CRS companies to the appellant. It is also his submission that head office of the appellant settled the bills raised by such CRS companies for the issuance of tickets by the passengers. He would submit the demand confirmed by the adjudicating authority in these cases in respect of the payment made by the headquarter of the appellant for the tickets issue to the passengers who were based in India. He would take us through the provision of Section 66A of the Finance Act, 1994. It is his submission that the said Section will not apply in the case in hand as branch office are not making any payment to CRS companies. He would submit that the issue involved in this case is now squarely settled by the majority decision of the Tribunal in the case of British Airways Vs. Commissioner of Central Excise (ADJN), Delhi - 2014....
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....into commercial contract, in this case the beneficiary of the service is Indian office. It is his further submission that CRS companies clearly shows that transaction relating to booking made by Indian Travel Agent which are under the control of Indian office of appellants. It is his further submission that these tickets are for the passengers embarking in Indian for international journeys and therefore the user of service provided by the CRS companies is appellant and not their foreign based head office. He would submit that Hon'ble Supreme Court in the case of All India Federation of Tax Practitioners - 2007(7) STR 625 (SC) has held that Service Tax is a VAT, which in turn is a destination based consumption tax in the sense that it is commercial activity and it is not a charge on the business but on the consumers and is leviable on only services provided within the country. He would also reliance placed on the decision of Hon'ble Bombay High Court in the case of Commissioner of Service Tax, Mumbai-II Vs. SGS India Pvt. Ltd. 2014 (34) STR 554 (Bom.) to propose that destination of the services can be determined only location of the service provider; location of the recipien....
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....tfully reproduce the same. "42. In the light of the above undisputed position, the legal issue which arises is as to whether British Airways, India has to be considered as an extension of British Airways UK or the same has to be treated as a separate legal entity in terms of the provisions of Section 66A(2). The provisions of Section 66A(2) are to the effect that 'where a person is carrying on a business through a permanent establishment in India and through another permanent establishment in a country other than India, such permanent establishments shall be treated as separate persons for the purposes of this Section." The Explanation 1 appearing below the said sub-section is to the effect a person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country". 43. Ld. DR appearing for the Revenue has strongly contended that British Airways, India cannot be treated as a separate legal entity in terms of the said provisions of Section 66A(2) inasmuch as British Airways, India cannot be held to be a permanent establishment of British Airways, UK. The same is only a branch office of British Airways, UK. My a....
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....ermission granted to British Airways, UK is to establish a branch office in India for operating air services. But whether such establishment in India is to be considered as permanent establishment in terms of provisions of Section 66A and as such to be treated as a separate person, is the issue required to be decided. The British Airways, India has appointed IATA agents who issued and sold air tickets to the passengers, collected the air fare from them and remit the same to British Airways, India, after deducting their commission. The said earnings collected by British Airways, India are remitted to their head office in UK. 45. Going back to the provisions of Section 66A read with the explanation to sub-section (2) of the said Section, a person carrying on a business through a permanent establishment, is required to be treated as separate person for the purpose of the said Section. If that be so, the issue as to whether British Airways, India is to be treated as a separate person or not, is required to be addressed in the light of the said provisions of law as contained in Section 66A. Whether the same is a permanent establishment or not in the light of the other laws, in my vie....
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....en the two of them and such services are being utilised by the travel agents. 48. I also find myself in agreement with the observations and findings arrived at by ld. Member (Technical) that the service is consumed by the persons receiving the same. The service having been provided by a foreign based company to a foreign based head office there cannot be any liability of the present appellant to discharge its Service Tax, inasmuch as Service Tax being a destination and consumption based tax cannot be created against the non-consumer of the services. 49. Ld. Member (Technical) has also discussed in para-31 of the proposed order as to how the British Airways, India a branch office of British Airways, U.K. cannot be considered as a temporary establishment. The same is not for a particular project after the completion of which the same would get wound up. The same has been specifically permitted by RBI to carry on the air transportation activities and has to be held as a permanent establishment, in which case on account of the provisions of Section 66A, it has to be treated as a person separate from its head office. 50. It is also not the Revenue's case that British Airways, I....
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.... confirmed, against an assessee, who is even challenging the same on merits, he can always take an alternative plea of availability of the demand as Cenvat credit to him leading to Revenue neutral situation. As such, even on this count, the appellant is bound to succeed. 52. I am also of the view that the demand, having been raised by invoking the longer period of limitation is hit by the provisions of Section 11A of the Act. My ld. Brother Shri D.N. Panda in his proposed order has held that inasmuch as the appellant was not registered under the Act and failed to file return periodically their plea of bona fide belief does not arise and there was a deliberate breach of law to cause evasion. I am afraid that I do not find myself in agreement with the said observations made by my brother. If non-registration and non-filing of returns is the criteria for rejecting the appellant's plea of bona fide belief and holding against them, the plea of limitation would not be available to any assessee, inasmuch as the Service Tax liabilities would arise only in those cases where the appellants are not registered and are not filing the returns. Coming to the bona fide belief of the assessee....