TaxTMI 
TaxTMI 
2024 (7) TMI 11
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.... to the investigation, two show cause notices dated 22.04.2016 and 27.11.2018 were issued by the department to the appellants, alleging therein that they had provided services and earned commission/ incentive from Global Distribution System (GDS) companies for visa and passport processing charges along with management fees, emigration charges, service charges, ORC (Over-Riding Commission) for booking of airtickets, cancellation charges for cancellation of air tickets provided by them were classifiable as 'Business Auxiliary Service' (BAS) as per provisions of Section 65(19) ibid read with Section 65(105)(zzb) of the Finance Act, 1994 and these were taxable services as per provisions of Section 65B(44) ibid read with Section 65(51) ibid, but the appellant did not pay the service tax due thereon. It was also noticed by the revenue that the appellants had procured air tickets from the airlines/ consolidators and sold those to their customers at higher rate, on which they did not pay service tax under the category of air travel agent's service. It was also alleged that they had collected an amount of Rs. 5,11,69,227/- from their customers as being service tax, but had not deposited the....
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....dmitted, and it is not in dispute, that the appellants has exercised the said option under Rule 6(7) ibid and that the appellants were paying service tax at the specified rate of the basic fare under Rule 6(7) ibid, that would amount to complete discharge of service tax liability on any service provided in connection with the booking of air tickets and there can be no further demand for service tax by treating any part of such service as BAS. To strengthen the above submission, the Learned Advocate has relied upon the following decisions rendered by the judicial forum: (i) Modiline Travel Services Pvt. Ltd. Vs. CST -2023 (12) TMI-911- CESTAT New Delhi. (ii) BCD Travels India Pvt. Ltd. Vs. CST-2023 (385) ELT 526 (Tri. Mad) (iii) Akbar Travels of India Pvt. Ltd. Vs. CST -2019(22) GSTL 427 (iv) CCE Vs. Shabeer Travels -2010 (3) TMI 818-KERLA HIGH COURT (v) Kafila Hospitality & Travels Pvt. Ltd. Vs. CST - 2021 (47) GSTL 140 (LB) (vi) Akbar Travels India Pvt. Ltd. Vs. CCE - 2018 (14) GSTL 248. 2.2 He further submited that incentives/commission received by Air Travel Agent from GDS/CRS Companies and from Airlines is not liable to S....
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....bid and the same was being credited to the government exchequer. 2.7 He also submitted that whatever service tax was collected from customers was duly deposited with the Government. In spite of the above, the revenue has proceeded on the totally erroneous basis, without any evidence, that the service tax deposited by the appellants was the service tax on commission/ discount received from Consolidators and on incentives received from the Airlines and not service tax collected from their customers. There is absolutely no evidence whatever in the SCNs that the commission/ discount received from Consolidators was inclusive of Service tax. On the contrary, in his statement dated 06-11-2015, the appellant's Managing Director, Shri Baby John has stated that the Consolidators were deducting Service Tax and paying the appellants net commission. There is no contrary evidence cited in the SCNs to this effect. Therefore, the presumption in the SCNs that what the appellants deposited with the Government was the Service tax collected by them from Consolidators in the commission and not the service tax collected from the appellant's customers is totally baseless and unsubstantiated. The deman....
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....ted that the proceedings initiated by the Department is barred by limitation of time as the present case is not one of fraud, collusion, willful mis-statement or suppression of facts or contravention with intent to evade payment of service tax. Since the appellants had exercised option under Rule 6(7) ibid and had paid the service tax at the specified rate of basic fare, the same was complete discharge of service tax liability and no further service tax was payable. This was the prevalent view amongst the air travel agents generally and the fact that such a view was a bona fide one, stands vindicated by the various decisions rendered by the High Court and Tribunal as referred to herein above in the case of leading air travel agents. Further, it has also been contended that the appellants had maintained complete records and accounts of their activities and there was no clandestine activity or deliberate concealment. Where complete records have been maintained and the issue involved is one of legal interpretation, the longer period of limitation cannot apply. In this context, he relied on the following judgments. (i) Steelcast Ltd v CCE - 2009 (14) STR 129 (upheld in 2011 (2....
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....chnology service and any activity that amounts to "manufacture" within the meaning of the clause (f) of section 2 of the Central Excise Act, 1944 (1 of 1944)" 5.2 Further, the definition of taxable service provided under Section 65(105)(zzb) ibid is quoted below :- "65(105)(zzb) "taxable service" means any service provided or to be provided to a client, by any person in relation to business auxiliary service." 5.3 "Air travel agent" has been defined in Section 65(4) of the Finance Act and the relevant portion is reproduced below:- "65(4) "air travel agent" means any person engaged in providing any service connected with the booking of passage for travel by air." 5.4 Further the taxable service under Section 65(105)(l) ibid is reproduced below :- "65(105)(l) "taxable service" means any service provided or to be provided to any person by an air travel agent in relation to the booking of passage for travel by air" 6. We find that the Air Travel Agents are using the portals of the same CRS service providers for booking of air tickets. The CRS is computerized system used to store and retrieve information and conduct transaction related to Air Trave....
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....achieving a pre-determined target. The air travel agent also receives an additional amount in the form of incentives/ commission from the airlines or the CRS Companies. The receipt of incentives/commission would not change the nature of the services rendered by the travel agent. Whether the ticket is bought directly from the airline or through the CRS, the same would not make any difference. Thus, in our view, the commission, incentives, cancellation charges etc., received by the appellants cannot be subjected to levy of service tax under BAS. Moreover, it is on record that during the disputed period, the appellants were paying service tax under Rule 6(7) ibid and since, payment of service tax under air travel service was accepted by the department, contrary stand cannot be taken to fasten the tax liability on the appellants under a different category of service namely, BAS. 8. We also find the subject disputed issue herein is squarely covered by the ruling of Larger Bench of Tribunal in the case of Kafila Hospitality & Travels Pvt. Ltd. (supra). It has been held that the incentive/commission is not subject to levy of service tax. The relevant paragraphs in the said order are re....
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....ooking tickets for the passengers/sub-agents. Earlier, the IATA agents were charged by the CRS Companies for access to the portals. However, due to increasing competition in the market, the CRS Companies stopped charging the agents for booking through the portal and instead, in order to increase the flow of business, the CRS Companies started to part with a portion of their consideration (charges/commission) and paid the same to the IATA agents when the agents achieve a minimum quantum of bookings through the concerned CRS portal. This incentive is normally termed as 'CRS commission'. The three CRS Companies involved are Amadeus India Private Limited [Amadeus], Interglobe Technology Quotient Pvt. Ltd. [Galileo] and Abacus India [Abacus]. xx xx xx 41. On a consideration of the entire matter it transpires that the following two main issues arise for determination :- (a) Whether service tax can be levied under the category of 'business auxiliary service' on target based incentives paid to the travel agents by airlines by alleging that the travel agents are promoting and marketing the business of the airlines; and (b) Whether the commission paid by CRS Com....
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....llection etc. In this context, we find that the CBEC vide Circular No. 137/6/2011-ST dated 20.04.2011, has clarified that the assistance provided by visa facilitation directly for processing of visa application, does not fall under any of the taxable services under Section 65(105) ibid. Hence, levy of Service tax on that count is not attracted. The learned adjudicating authority has also considered the said Circular in the impugned order, but has held that activity of providing assistance is a 'service'; but such service was neither covered under negative list, services as per Section 66D ibid, nor exempted under Mega Exemption Notification No. 25/2012-ST dated 20.06.2012. On such interpretation, he has opined that Service tax is required to be paid on such services after 01.07.2012. Accordingly, learned adjudicating authority found that demand for the period 01.04.2010 to 30.06.2012 is not maintainable, but confirmed the demand for the period 01.07.2012 to 30.09.2015 and from October 2015 to Mach 2016. We find that learned adjudicating authority in the present case, has wrongly conceived the CBEC circular dated 20.04.2011, inasmuch as all the taxable services are defined in sub-cl....
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....ets. Appellants render the services of Air Travel Agent by booking of passage for travel by air for the clients/ customers. If the Airlines do not provide any commission to them, they recover the cancellation charges/booking overhead charges/ cost of booking tickets in the name of ORC/RAF from their customers. On the said ORC/RAF amount, the impugned SCNs had proposed for demand of service tax under the head BAS. However, we find that neither the SCNs nor the impugned order have specified under which clause of the definition of BAS the said activity of appellants would be covered. Appellants render the services of Air Travel Agent by booking of passage for travel by air for the clients/ customers and not provided any Business Auxiliary Service to them. We also find that this activity is not covered by any of the specific clauses of the definition of BAS as provided in Section 65(19) ibid. These charges are collected from the persons booking the air ticket and this is not the amount received from the appellant's clients i.e., the airlines/CRS. It is not disputed that in respect of cancelled tickets, the airlines/CRS do not give any commission whatsoever to the appellants. In view of....
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....tors. In these cases, the consolidators had opted under Rule 6(7) ibid and paid the Service tax at the specified percentage of basic fare. As such, there cannot be levy of Service tax under Rule 6(7) ibid again for the same Air ticket dealt with by the appellants. However, from the documentary evidences provided by the appellants, we find that wherever tickets were purchased from consolidators, they had started paying Service tax on the basic fare from 01.04.2014. In these circumstances, the service tax demand confirmed against ticket booked through consolidators, is legally not correct and we do not find any merits in the impugned order, insofar as it has confirmed the adjudged demands on the appellants. 14. As regards the dispute of present matter we find that allegation was made in the demand notices that the appellants were recovering the amount representing Service tax from their sub-agent but the same was not deposited to the Government exchequer. Section 73A of the Act, 1994 provide as under : (1) Any person who is liable to pay service tax under the provisions of this Chapter or the rules made thereunder, and has collected any amount in excess of the service tax....
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....the demand notice, it is apparent that except commission (if any) all the payment collected by the appellants (as IATA) which includes all taxes (Service tax also), on behalf of the airlines are transferred to airlines through Billing Settlement Plan (BSP). As such, the amount of Service tax collected from the clients/sub-agents has already been paid to the Government exchequer on monthly basis, when transferring the amount of Service tax along with fuel charges to the airlines through billing settlement process (BSP). It is only a presumption of the departmental officers that the commission/discount received by the appellants from the consolidators is inclusive of Service tax, without placing any evidence in this regard. We notice that as an IATA, the appellants have transferred the amount of Service tax to the account of Airlines, through BSP, while opting for payment of Service tax as per Rule 6(7) ibid. The applicable Service tax was only collected/recovered by the appellants from the customers/sub-agents and same was deposited to the government account. We also find that the appellant's Managing Director Shri Baby John in his statement dated 06.11.2015 had stated that the appe....