2023 (3) TMI 1211

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....demand of service tax in respect of Central Reservation System [CRS] incentives with interest and penalty. It needs to be noted that the demand in respect of money transfer service was set aside. The order dated May 23, 2017 passed by the Additional Commissioner was, accordingly, modified by the Commissioner (Appeals). 2. The appellant has an agreement with M/s. Galileo India Pvt Ltd., M/s. Amadeus India and M/s. Calleo Distribution [the companies], under which these companies provided CRS which is software connectivity used by the appellant to book air tickets/ hotel rooms for the customers. The appellant is paid certain amount by these companies for using the CRS. The Adjudicating Authority has confirmed the demand of service tax on th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he amount received towards money transfer transactions has been dropped by the Commissioner (Appeals) in view of the decision of the Tribunal in Paul Merchant vs. CCE [2013(29) STR 257 (Tri.-Del.)]. 7. Thus, the sole issue that arises for consideration in this appeal is as to whether the appellant can be subjected to levy of service tax on the amount received by the appellant for using the CRS of the companies. This issue has been decided by a Larger Bench of the Tribunal in favour of the appellant in Kafila Hospitality & Travels Pvt Ltd. vs. Commissioner of Service Tax, Delhi [2021(47)G.S.T.L. 140(Tri.-LB)]. 8. The Larger Bench had been constituted as a Division Bench of the Tribunal doubted the view expressed by the Division Bench o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....use the CRS software provided by the Company to book an airline ticket. It cannot, therefore, be said that a travel agent is promoting any activity before the passenger. 61. The matter can be examined from another aspect. For booking a ticket, a travel agent would require a system to book the tickets. A travel agent is free to choose any CRS system. A passenger would never request a travel agent to book his ticket only through Amadeus/Galileo/Abacus system. Can it, therefore, be said that the travel agent is engaged in the promotion of a particular CRS system. xxxx xxxx xxxx 65. Mere selection of software or exercising of a choice would not result in any promotional activity. The Department has not pointed out at ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

...." and, therefore, are not leviable to service tax under Section 67 of the Finance Act." (emphasis supplied) 10. The Commissioner (Appeals) relied upon the earlier decision of the Tribunal in the case of the appellant in D. Pauls Consumer Benefit. This decision was examined by the Larger Bench of the Tribunal in Kafila Hospitality in the following manner: "82. A perusal of the aforesaid decision would indicate that though in paragraph 2 of the decision, the Division Bench noted that the lower authorities had categorized the services rendered by the appellant as 'tour operator", but in paragraph 5 of the decision the Division Bench observed that the services provided by the appellant were rightly covered under "BAS". ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....of Section 65A of the Finance Act; and (iv) the incentives paid for achieving the targets are not leviable to service tax." 12. The reference was, accordingly, answered by the Larger Bench: "86. In the light of the aforesaid discussion and findings, the answers to the six issues that have been referred to the Larger Bench are as follows:- First issue: The incentives received by a service recipient from a service provider cannot be subjected to levy of service tax; Second issue: This issue does not arise for consideration in this appeal as the show cause notice and the adjudicating order had confirmed the demand under section 65(19)(ii) of the Finance Act; Third issue: A passenger cannot be dee....