TaxTMI 
TaxTMI 
2019 (2) TMI 678
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....ce Tax Department. During the course of audit of accounts, it was noticed that the appellant had entered in a General Sales Agency Agreement (Cargo) with Malaysian Airlines Systems, Berhad on 30.3.2007 for functioning as General Sales Agent for cargo transportation and other services provided by Malaysian Airlines. It appeared that they are liable to pay service tax under Business Auxiliary Services (BAS) on the entire income earned by them for providing the services. On verification, it was noticed that the appellant had not discharged appropriate service tax on their income. Show cause notice was issued proposing to demand service tax along with interest and also for imposing penalties. After due process of law, the original authority con....
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.... whereby the appellant is entitled to purchase the cargo slot at a fixed price and make profit from sale of space to the exporter. While doing so, the appellant takes the risk of incurring any loss in case the cargo slot is not sold to any customer / exporter. It is also explained by him that in case when the appellant is acting as a General Sales Agent, the master airway bill will be raised by Malaysian Airlines. When the appellant purchases and sells the cargo slots as an independent buyer, the house airway bill would be issued by the appellant and the appellant will be liable to make the payment for cargo slot to the Malaysian Airlines irrespective of the fact whether the customer pays for the slot. Thus the appellant is just making prof....
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....go P. Ltd. 3. The ld. AR Shri K. Veerabhadra Reddy supported the findings in the impugned order. He argued that the appellant is acting as a General Sales Agent as per the agreement entered between the parties. Adverting to clause 5 and 9 of the agreement, he submitted that clause 5 gives the details of the duties of general sales agent. Sub-clause (vii) of clause 5 states that the appellant is to issue airway bills in accordance with the agreement in connection with the sales made on behalf of Malaysian Airlines. Thus, the airway bills, if any, issued are on behalf of Malaysian Airlines and therefore the appellant in all transactions is doing the activity of general sales agent. Therefore, the transaction falls within the definition of ....
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....f the said agreement is crucial for analyzing the issue under consideration. The same is extracted as under:- "The General Sales Agent shall claim sales commission of 5.0% (five percent) of the IATA's published rate for the services of MAS and on any through air transportation connection with the services of MAS in accordance to IATA Resolutions 801 and 801a(II). However, where MAS and the General Sales Agent have a prior specific rates arrangement relating to the transportation of any consignment on any particular route, the General Sales Agent is not entitled to any commission." 6. As per clause 9, it is seen that the Malaysian Airlines and the appellant has some arrangement with regard to the rates of the cargo slots which can be s....