TaxTMI 
TaxTMI 
2024 (7) TMI 65
X X X X Extracts X X X X
X X X X Extracts X X X X
....t; in the event of a customer cancelling a booked ticket, the Appellant withholds a cancellation fee and refunds the remaining portion of the ticket price to the consumer. Two show cause notices 21.10.2015 and 06.03.2018 were issued to the appellants holding that the convenience fee and cancellation fee received or retained by the appellant was towards the consideration of 'Business Auxiliary Service" rendered by the appellant. The proposals in the SCNs were confirmed by the impugned orders dated 30.11.2016 by confirming Service Tax of Rs 24,06,95,410(Rs 13,68,31,521 on Convenience Fee for the period April 2010 to March 2015& Rs 13,68,31,521 on Cancellation Fee from 2010-11 to30.06.2012) and by order dated 29.11.2018 by confirming Tax of Rs 38,15,77,624 (for the period April 01, 2015 to June 30, 2017). Hence, these appeals. 1.1. In addition, the Department has also moved a miscellaneous application seeking change of name of Respondent from CCE, Delhi-IV to Commissioner of Central Good & Service Tax, Gurugram. Learned AR for the Department submits that the Central Board of Indirect Taxes & Customs vide Notification No.02/2017-Central Tax dated 19.06.2017 specified that the appellan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Del.), that cancellation fee paid to the Air Travel Agent in excess of the commission is exempt from the levy of service tax. He submits that in 2008, the definition of taxable service was amended by replacing the word 'to a customer' with the words 'to any person', to make it abundantly clear that air travel agent services could be provided to both the customer and to the airline; after the introduction of negative list also, the option to discharge service tax , in relation to booking of passage for travel by air, on the deemed commission value continued vide Rule 6(7) of the Rules, continued. 3. Learned Counsel for the appellants, submits also that the impugned order does not reason why it holds the activity in question as BAS instead of ATAS; it merely reproduces the definition and upholds the classification of BAS; prior to 01.07.2012, taxable services are to be classified on the basis of - (i) Specific vs General description, (ii) Essential character, (iii) Order of precedence as prescribed in section 65A. 3.1. The convenience fee in the instant case is charged for booking air tickets online and cancellation fee is charged on cancellation of tickets already booked; both the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and in Akbar Travels of India Pvt Ltd Vs CCE, Mumbai [(2019 (22) GSTL 427 (Tri. - Mumbai)] that the services rendered by air travel agents cannot be categorized under business auxiliary service. 4. Learned Counsel submits that the settled principle of law is that what is to be agitated and adjudicated in a case is limited to the allegations made in the show cause notice pertaining to the case.in the instant case, it is crucial to note that the show cause notice and impugned order wrongly classify the impugned activities as "Business Auxiliary Services" for the period before 01.07.2012; hence, the demand amounting to INR 5,31,97,849is liable to be set aside on this count alone. He relies on * CCE, Nagpur Vs M/S Ballarpur Industries Ltd 2007 (215) ELT 489 (SC) * Reckitt & Colman of India Ltd Vs CCE 1996 (88) ELT 641 (SC). * Warner Hindustan Ltd Vs CCE, Hyderabad 1999 (113) ELT 24 (SC) * M/s. Marubeni India Pvt Ltd Vs CST, New Delhi 2016 (45) STR 549 (Tri. - Del.) 5. Learned Counsel would submit further that Services offered by the Appellant for which "convenience fee" is paid are "in relation to the services of booking of tickets for travel by air" post 01.07.2012 and the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....undled with booking of air tickets; CESTAT has taken a similar view in respect of educational services in the case of Mody Education Foundation Vs CCE, Jodhpur(2023) 7 Centax 116 (Tri.-Del). 7. Learned Counsel submits that the finding in the impugned order that the Appellant did not include the convenience fee charged from the passenger in the base fare is incorrect as the law does not provide for such inclusion; Rule 6(7) clearly defines base fare as only that amount on which commission is paid by the airlines to the air travel agent; it is a well settled proposition of law that if the statute prescribed a thing to done in a particular manner, it should be done only in that manner and not in any other manner as held in Tata Chemicals v. CC (P) Jamnagar 2015 (320) ELT 45 (SC) and CC Chennai v. Avenue Impex2014 (306) ELT 69 (Mad.) 8. Learned Counsel submits that Rule 6(7) does not differentiate between revenue of air travel agent from airlines and revenue from passengers; Rule 6(7) is clear in stipulating that payment of service tax by air travel agent will be on the base fare; the Rule does not provide those other payments, if any, shall be considered for discharge of service tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llation charges are in the nature of penal charges or liquidated damages as the Appellant suffers loss on account of cancellation as they do not receive any commission amount from the airlines; hence, they are not liable to service tax; The Hon'ble Principal Bench of the Tribunal in the case of British Airways Plc India Branch Vs CST, Delhi 2018 (10) G.S.T.L. 561 (Tri. - Del.) held, in an identical case, that the 'Refund Administration fee' charged on cancelled air tickets is not subject to service tax since no service is rendered to passengers who have not undertaken any travel on cancelled tickets. 10. Learned Counsel submits in addition that extended period of limitation is not in-vocable in the present case; demand, confirmed for the period till October 2013 is barred by limitation; there was no fraud or collusion or willful misstatement or suppression of facts or contravention of any provision of the Finance Act or the Rules made there under, with intent to evade payment of tax on the part of the Appellant. He submits that extended period cannot be invoked for the following reasons. * The appellant is duly registered with the service tax department; has been discharging ser....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T 513(SC) * CCE Vs Bilag Industries Pvt. Ltd 2011 (264) ELT195 (Guj) * CCE Vs ITC Ltd., 2010 (257) ELT 514 (Kar) * Ispat Industries Ltd Vs CCE 2006 (199) ELT 509 (T) * NIRC Ltd Vs CCE 2007 (209) ELT 22 (T) * Chemicals & Fibres of India Ltd Vs CCE 1988 (33) ELT 551 (T) * Caprihans India Ltd Vs CCE 2015 (324) ELT 8 (SC) * CCEVs Coolade Beverages Ltd., 2004 (167) ELT A174 (SC) * Hyderabad Polymers Pvt Ltd Vs CCE 2004 (166) ELT 151 (SC) * CCE Vs OCP India Pvt. Ltd.,2005 (179) ELT A103 (SC) * CCE Vs Jalani Enterprises 2001 (134) ELT 813(T) * Jindal Vijayanagar Steel Ltd Vs C.C.E. 2005 (192) ELT 415 (Tri. - Bang.) * Kirloskar Oil Engines Ltd Vs CCE 2004 (178) ELT 998 (T) * Rolex Logistics Vs CST 2009 (13) STR 147 (Tri. - Bang.) 11. Learned Counsel submits that when the demand is not sustainable then there is no cause for consequential interest under Section 75 of the Finance Act; the Appellant has not contravened any of the provisions of the Finance Act, thus, no penalty is imposable under Section 77; pre-requisites for invoking extended period of limitation not being in existence, there is no case for imposition of penalty under Section 78. He further submits ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed are over and above the booking of tickets and, therefore, not classifiable under air travel agent service; service tax liability of the appellant on convenience fees and cancellation of air tickets is not covered under service tax paid under Rule 6(7); the contention of the appellants (in appeal no. 66166/17) that the expressions 'any service', 'any person' and 'in relation to' used in the definition of air travel agent and taxable service, being of very wide nature, it is clearly implied that any service in relation to booking of passage for air travel will be covered within the scope of taxable service of air travel agent, is incorrect; the appellant has conveniently ignored the inherent restriction placed in the definition of 'air travel agent' and 'taxable service' that any service to be within the ambit of air travel agent service should be connected with or should be in relation to the booking of the passage for travel by air; if the service is not connected or related to the booking of air ticket, it will not be covered in the definition of the taxable service of air travel agent'; reliance on the analogy of port service and case laws are of no avail as the definition of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ithin the definition of tariff and no amount will be collected from the consumers over and above this; as separate convenience fees charged from the passengers is not included in the Air Tariff as defined in the Air Craft Rules, recovery of such fee is un-authorised and is not relating to air travel agent service; appellant's objection that the Order of the Secretary of the Ministry of Civil Aviation cannot be relied upon, as per decisions cited in the appeal (para 37 and 39) is totally misplaced as the said Order issued by the competent authority and is neither borrowed nor applied to fill any statutory gap in the provisions of service tax; it is referred to in the impugned order to demonstrate what type of payments falls in the ambit of the remuneration of the air travel agents; appellant's argument that flow of consideration can be from two persons for an activity isnot relevant as the dispute is not because of or in relation to flow of consideration. 13. Learned Special Counsel submits further that the convenience fees/service fees charged from the passengers is not for providing air travel service but is rather received for providing post booking of air tickets services which....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lassification of taxable service shall be determined according to the terms of the sub-clauses of clause (105) of section 65; Section 65A (2) shall come into picture only when there is some doubt; in the instant case there is no doubt regarding the classification of the services relating to booking of the tickets; the issue regarding payment of service tax on other services which are provided after completion of booking and therefore, not covered in air travel agent service; these services manifestly fall under BAS for the reasons discussed above; when there is no doubt regarding classification, invocation of different clauses of section 65A (2) of the Finance Act is completely unwarranted. 14.1. Learned Special Counsel would submit that Service tax paid by the appellant by exercising the option under Rule 6(7) of the STRs is undisputedly in relation to the air travel agent service which ends with booking of tickets; whereas the services provided by the appellant to the passengers after booking of the tickets for which convenience fees is charged from the passenger does not fall in the category of air travel agent service before and after 1.7.2012; hence, service tax paid by the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e event of cancellation of ticket; master agreement does not have any clause regarding imposition of any such penalty; the passenger is already penalised by the airlines in the event of cancellation of ticket; since cancellation charges are not related to booking of the passage, it is not covered under air travel agent service; same is covered under customer care service falling in the broad category of the BAS. 16. Learned Special Counsel fairly concedes that the adjudicating authority allowed the same in OIO dated 29,11.2018 but did not deal with it in his Order dated 30.11.2016; this benefit cannot be denied. Learned Special Counsel submits that the plea of multiple assessments for the same period is not relevant; different notices cited are not the instances of assessments but are different proceedings initiated under section 73 of the finance Act for different reasons; Section 73 does not impose any restriction for issuing more than one notice for different reasons for recovery of non-paid/short paid tax; the appellant does not have a case that the department had issued any earlier SCN on the same issue; hence, none of the case laws relied upon by the appellant to support the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eral principles regarding invocation of extended period; in the instant case, the elements of suppression of facts relating to the two taxable services and evasion of tax with ulterior motive are clearly demonstrated; hence the above case laws rather support the Revenue's case. He submits that the non-disclosure of income under two heads; one sided belief that they are not liable to pay tax and their not-seeking any clarification clearly betrays their predetermination, rather the bona-fide belief. He relies on following decisions to claim that extended period was rightly invoked. * Rachitech Engineering Pvt Ltd Vs CCE 2007 (215) ELT A22 (SC) * Usha Rectifier corporation Vs CCE- 2011 (263) ELT 655 (SC) * Pashupati Spinning and Weaving Mills Ltd, 2015 (318) ELT 623 (SC) * Nizam Sugar Factory Vs CCE, Hyderabad, 1999 (114) ELT 429 (Tri-LB) 17.1. Learned Special Counsel submits that as demands of Service Tax have been raised and confirmed by invoking extended period of limitation/ normal period, the case is fully covered under proviso to Section 73(1)/ Section 73(1), Section 75, Section 78 of the Finance Act, 1994 for demanding tax, interest and imposition of penalty. 18. Hear....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erent services, by virtue of the principles of classification of services, all of them require to be classified under the main service i.e. Air Travel Agent Service before 01.07.2012; even after 01.07.2012, the services need to be clubbed together as bundled services. 20. In the instant case, the question is as to whether the service for which "convenience fee" was received and the activity for which "cancellation fee" was charged is part and parcel of Air Travel Agent Services ("ATAS") (taxable vide section 65(105) (l)) or Business Auxiliary Services ("BAS") (taxable vide section 65(105) (zzb)). The relevant extracts are as follows. 20.1. We find that Air Travel Agents Service became taxable from 01.07.1997 and the entry therein under Section 65(41)(l) reads as follows: "Taxable service means any service provided, to a customer, by an air travel agent in relation to the booking of passage for travel by air" 20.2. The said definition has undergone a change in 2008 to read as under: "Taxable service means any service provided, to any person, by an air travel agent in relation to the booking of passage for travel by air". 20.3. Section 65 (105) (l) "taxable service" means any....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n air travel agent to a customer, shall be the gross amount charged by such agent from the customer for services in relation to the booking of passage for travel by air excluding the airfare but including the commission, if any, received from the airline in relation to such booking. We find that sub-Rule 7 of Rule 6 of Service Tax Rules, 1994 provides an option to the air travel agents to pay service tax on the "basic fare" as defined in this sub-Rule, at the rate specified under the said sub-Rule. (7) The person liable for paying the service tax in relation to the services [of booking of tickets for travel by air] provided by an air travel agent, shall have the option, to pay an amount calculated at the rate of [given as s percentage]of the basic fare in the case of domestic bookings, and at the rate of [given as a percentage] of the basic fare in the case of international bookings, of passage for travel by air, during any calendar month or quarter, as the case may be, towards the discharge of his service tax liability instead of paying service tax [at the rate specified in section 66B of Chapter V of the Act] and the option, once exercised, shall apply uniformly in respect of a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... air travel agent is not to get anything. We may also say that the customer gets the service not for any extra charges. The air travel agents are not supposed to charge anything more than the value fixed for the passages by the airlines. Therefore, the commission that is earned by the air travel agent has a direct nexus with the booking that he makes for the air-travellers. If, in the process, the airlines is benefited and offers some commission that would not change the nature of the service provided by the air travel agent and it cannot be said that the service is provided only to the airlines and not to the air-traveller. On the other hand, we may say that it is because the air travel agent gives service to the air-traveller that the airlines is benefited, the tax is intended and in reality, is imposed as against the service provided by the air travel agent to the customer in the absence of which, there would be no question of any commission. 22. Learned Authorised Representative attempts to read the above judgement to suit the assertion by Revenue that the Convenience fee collected by the appellants is for the Business Auxiliary Service provided by them to the Airlines as part....
X X X X Extracts X X X X
X X X X Extracts X X X X
....would have been paid on the same; as both have not paid service tax on convenience fee/ service fee, the same is not in relation to or connected with the booking of passage travel by air; the appellants have started paying service tax on the cancellation fee from 01.07.2012 and the same is also charged not in connection with Air Travel Service. 25. We find that the above averment which is not elaborated in the impugned order is without any rhyme or reason. If the appellants are charging any fee or amount over and above, the limit prescribed by the concerned Ministry, it is not understood as to how the same constitutes a consideration towards any other service. If the appellants have violated any conditions of the Circular issued by the Ministry, it is for the concerned Ministry to take action against the appellants; for this reason, the amount charged by the appellants does not become a consideration for any other service. Ironically, the SCN does not specify what is the service rendered by the appellants to the airlines in addition to the service in relation to booking of tickets for passage through air. The argument that the convenience fee/ cancellation fee if permitted by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dication by considering the appellants stand that the demand may fall under the category of "Information technology Software Services" stand confirmed. As per declaration of law in the above decisions, allegations are required to be made by the Revenue very clearly in the show cause notice and adoption of classification of service under the heading different than the one proposed in the show cause notice amounts to passing the order beyond the scope of show cause notice which is not permissible and the impugned order is required to be quashed on the said ground itself. We order accordingly. 27. On going through various clauses of the agreement, we find that there is no condition that the appellants are required to promote or help or work as agents to further the business of the Airlines in other than booking the tickets. In terms of the agreement, the appellants are required to make arrangements, which include maintenance of their website for booking tickets with Indigo. Learned Counsel for the appellants submits that the agreements are similar with other airlines; the convenience fee is collected towards the access given to the customers to their website in the course of booking ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cellation charges. 29. Moreover, in the instant case, as far as the 'Convenience fee' and 'cancellation charges' are concerned, there is reciprocity and flow of consideration between the customer and the appellants and the airlines is not involved, notwithstanding the fact that they collect the fare and cancellation charges for the booking of ticket for passage through air. The Show Cause Notice did not bring about any evidence so as to assert that the airlines have some interest in relation to the charges collected by the appellant. We find that the service or tolerance of loss, if any, flows from the appellant to the customer, who pays the consideration. This being the position, it cannot be said that the 'Convenience fee' and 'cancellation charges' received by the appellants are part of consideration received by them towards the Business Auxiliary Services rendered by the appellants to the airlines. 30. Learned Counsel for the appellants submits further that even if assuming there are more than one services involved, they have to be categorised as per the Principles of Classification under Section 65(A). The appellant is providing Air Travel Agent Service and all other activit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inition of BAS would also reveal that the service provider must promote or market the service of a client. As noticed above, it is not a case where the air travel agent is promoting the service of airlines/CRS Companies. The air travel agent is, by sale of airlines ticket, ensuring the promotion of its own business even though this may lead to incidental promotion of the business of the airlines/CRS Companies. Thus, in terms of the provision of Section 65A(2)(a) of the Finance Act, the classification of the service would fall under "air travel agent" services and not BAS. 33. We find that there is merit in the argument of the appellants that the activities are 'in relation to the booking of passage for travel by air, and even if the activity is construed as a composite service where air ticket booking is held separate from the convenience of booking such air ticket online and the facility of cancellation of such air ticket, the essential nature of the composition of all the three activities is still one in relation to the booking of passage for travel by air. The convenience provided is exclusively for air ticket booking and so is the cancellation; even if the services are conside....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cilities at airports, railway stations and bus terminals, provision of basic necessities such as soap and other toiletries in the wash rooms, clean drinking water in the waiting area etc. form part and parcel of the transportation service; they constitute the various elements of passenger transportation service, a composite supply. The facilitation service of allowing cancellation against payment of cancellation charges is also a natural part of this bundle. It is invariably supplied by all suppliers of passenger transportation service as naturally bundled and in conjunction with the principal supply of transportation in the ordinary course of business. 11.3 Therefore, facilitation supply of allowing cancellation of an intended supply against payment of cancellation fee or retention or forfeiture of a part or whole of the consideration or security deposit in such cases should be assessed as the principal supply. For example, cancellation charges of railway tickets for a class would attract GST at the same rate as applicable to the class of travel (i.e., 5% GST on first class or air-conditioned coach ticket and nil for other classes such as second sleeper class). Same is the case....
X X X X Extracts X X X X
X X X X Extracts X X X X
....applicable to the appellants as the amounts received are nothing but consideration received in the rendering of the service as Air Travel Agent. 37. Coming to the period after the introduction of negative list from 01.07.2012, learned counsel for the appellants submits that for an activity to qualify as a service there has to be a contractual relationship where the service recipient desires the activity to be performed by the service provider and the service provider does so for a consideration. Post 01.07.2012, Section 65B (44) defines "service" as below. "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely, - i. a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or ii. such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or iii. a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g of air tickets; this facilitating activity is in relation to the services of booking of tickets for travel by air; it cannot be classified as a separate service which stands distinct from the service of booking of air tickets. We find that once the appellant has discharged the service tax liability on the basic fare as per Rule 6(7) of the Service Tax Rules, no service tax liability can be fastened to them for any other consideration received by them for the activity performed by them. 40. Learned counsel for the appellants further submits that even if the 'convenience fee' has to be considered separate as upheld in the impugned order, it would still qualify as an element which is naturally bundled with the service of booking of air tickets according to section 66F of the Act. We find that as per Section 66 F(3)(a) of Finance Act, 1994 if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character. Both the activities are bundled in the natural course of business. In the instant case, even if the activity is bifurcated to be booking of ticket and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ule 6(7) of the Service Tax Rules does not provide for such inclusion. In view of our finding as above, it is not the case of the Show Cause Notice that the value of Basic fare was suppressed. It is all about the Business Auxiliary Service/ taxable service alleged to have been rendered by the appellant in lieu of the consideration received under the heads 'Convenience Fee' and 'Cancellation Fee'. Therefore, any discussion on non-inclusion of these charges in the basic fare would be beyond the scope of the Show Cause Notice and would be reading the non-existent additional provisions in the statute which is not permissible as per the case law relied upon by the appellant. In view of the above discussion, we hold that no additional liability of Service Tax can be fastened to the appellant on account of 'Convenience Fee' and 'Cancellation Fee' even after 01-07-2012. 43. In addition the appellants further plead that when a booked ticket is cancelled, there is no service provided to the customer; the fee charged as "cancellation fee" is only towards the administrative expenses incurred by the Appellant; the Cancellation charges are in the nature of penal charges or liquidated damages ak....