TaxTMI 
TaxTMI 
2017 (9) TMI 1560
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....shment in India to provide ticketing and cargo facilities to customers besides operating through authorized agents. M/s Korean Air utilizes its own computer reservation system -TOPAZ- for direct sales and inventory management; they have also entered into agreements with operators of 'Computer Reservation System (CRS)/Global Distribution System (GDS)' which enables travel agents who handle ticketing for different airlines to access their 'seat inventory' for satisfying customer requirements. The system of M/s Korean Air, which contains complete details of 'seat inventory' of the airline, is made available to travel agents through the sole interface of 'Computer Reservation System (CRS)/Global Distribution System (GDS)'. 3. Computer Reservation System (CRS)/Global Distribution System (GDS) is an 'on-line platform' for transactions between the travel agents and various airlines for ticketing of passengers; the details of seats, reservations, ticketing and other travel related information facilitates a two-way transaction between the agent and the airline. The 'real time' availability of seats in any sector is provided to the travel ag....
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..../or retrieval services, it is the location of the recipient of the service that determines the taxability or exemption thereof. 5. The appellant contends that they are not the recipients of the service in terms of contract, functional compulsion or as payer of consideration. Also, according to the appellant, the beneficiary of the said service is not they but the travel agents. These were agitated in the adjudication proceedings. The original authority held that the ownership of the database or the source of consideration does not alter the applicability of the definition in section 65 (75) of Finance Act, 1994. The adjudicating authority concluded that the CRS/GDS operator is the provider of the said service and the consequences of section 66A of Finance Act, 1994 devolves on the Indian entity of the first party to the contract. Considering that section 66A was incorporated in Finance Act, 1994 only on 18th April 2006, the demand for the period prior to that was dropped. 6. Learned Counsel for appellant contends that the decision of the Tribunal in Qatar Airways and Emirates v. Commissioner of Service Tax, Mumbai-I [2016-TIOL-1263-CESTAT-MUM], which relied on an earlier deci....
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....oceedings printed light what is perceived by them as an erroneous decision in the earlier case. In such circumstances it is reasonable and indeed efficacious that a case is referred to Larger Bench." he sought to justify recourse to such mechanism in the instant dispute. According to him, the facts pertaining to the decision in re British Airways are distinguishable from the facts pertaining to the appellant who has been charged, either by the provider of the service or so attributed by the headquarters, for proportional use of the service by the agents in India. The decisions of the Tribunal in Torrent Pharmaceuticals v. Commissioner of Service Tax, Ahmedabad [2015 (39) STR 97 (Tri-Ahmd)], 3i Infotech Ltd v. Commissioner of Service Tax, Mumbai-II [2016-TIOL-3340-CESTAT-MUM] and Tech Mahindra Ltd v. Commissioner of Service Tax, Pune-I [2016-TIOL-709-CESTAT-MUM] were placed before us to further the contention that, notwithstanding the source of payment of consideration, the branch, as an independent entity and as the recipient of the service, should be fastened with the tax liability. 8. Having heard both sides, we note that reliance has been placed on various decisions that i....
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.... not belong to the CRS companies but as the definition of OLIDAR covers the activity of providing data or information, therefore the actor facilitating of providing data of the airline companies to the travel agents and vice versa is clearly covered in the definition of OLIDAR ....." 10. It is clear from the above that the adjudicating authority has transposed the transactions onto a portion of the definition in section 65(75) and section 65(105)(zh) of Finance Act, 1994 without any discussion to identify the appellant as the recipient of the service and, in accordance with the special provisions of section 66A, the deemed provider of the service for liability to tax. This is an essential requirement considering the manner in which section 66A has been enacted as a deviation from the general norm in section 66 of Finance Act, 1994. It would appear to us that the tenor of the various decisions handed down by the Tribunal, and cited by the rival sides, have not been appreciated for the valorous attempts to clarify this much-misinterpreted provision of Finance Act, 1994. It, therefore, devolves upon us to enlighten both disputants and, at the same time, provide ourselves with that ....
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....sification of the service must necessarily be dealt with in concatenation with identification of the recipient. The impugned order has failed to so and is liable to be set aside on that count itself. 13. Nevertheless, we must also address the larger issue of the intention of the sovereign legislature in placing the burden of tax on the recipient of the service. The economic reality of cross-border commercial transfer of goods has been grafted in to the tax laws of most countries in near-perfect visualisation of the flows and has evolved as a nearly universal code. The intangibility of services, unfortunately, does not easily lend itself to such a clear perception. Such transnational engagement in services take multifarious forms which are not readily amenable to straitjacketing as one rule fits all ; hence, the selective culling of judicial interpretations in a vain attempt to persuade us to adopt respective points of view. Most disputes have stemmed from the single-minded determination to tax by relying upon the Explanation in section 66A that disaggregates units within the same commercial entity and the refuge sought by assessees in this disaggregation to claim exclusion from ....
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.... that taxability arises not merely from conformity with the descriptions in section 65(105) of Finance Act, 1994 but also with reference to the identification of recipient of the service. The authorities sought to tax the commission received by entities in India from M/s Western Union, who had engaged to handle remittances from abroad to persons in India through these entities, as consideration for business auxiliary service rendered within India. Considering the nature of the service envisaged in section 65 (19) of Finance Act, 1994 and the scheme of Export of Service Rules, 2005, it was held that such service had been rendered to the remitters abroad and, therefore, outside the scope of taxability under section 66 of Finance Act, 1994. Though the setting was one of export of services, the principle that was espoused, viz., the identification of recipient of the service being crucial to taxability, is the fulcrum of the decision in re Paul Merchants Ltd. 17. In re Torrent Pharmaceuticals Ltd, relied upon by Learned Authorised Representative, the Tribunal had held that, the Explanation in section 66A notwithstanding, the indivisibility of branches and head office precluded the c....