TaxTMI 
TaxTMI 
2024 (7) TMI 65
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....om the customer for booking the air ticket; 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 d....
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....s CCE, Jaipur - I 2015 (37) S.T.R. 513 (Tri. - 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 ....
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.... Order No. A/1716/2013-WZB/CSTB) and by CESTAT, Mumbai 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 p....
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....the "online booking facility"; once the activity for which "convenience fee" is received is noted to be bundled 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 f....
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....oked 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 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 pa....
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....ar Drugs & Liniments 2002-TIOL-266-SC-CX • Continental Foundation Joint Venture Sholding, Nathpa H.P v. CCE, Chandigarh - I 2007-TlOL-152-SC-CX • Smart Finance Vs CCE Jaipur • Uniworth Textiles Ltd Vs CCE2013 (288) ELT 161(SC) • Chamundi Die Cast P. Ltd Vs CCE2007 (215) ELT 169 (SC) • Larson & Toubro Ltd Vs CCE, 2007 (211) ELT 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 2....
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....7. 12. Shri Rajpal Sharma, Learned Special Counsel, appearing on behalf of Revenue, argues opposing various grounds of appeal filed by the appellant. As regards the ground that services provided to airlines and to the passengers are air travel agents service, he submits that it is not denied by any departmental authority and accordingly no dispute was raised regarding service tax paid by them on the Air Travel Agent service under Rule 6(7) of STR; the dispute in the SCNs was relating to nonpayment of service tax on services, other than air travel agent service; adjudicating authority has held that services provided to the passengers for which convenience charges are received 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....
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....of internet, staff and various administrative expenses; since these services are provided post booking of tickets, these are not covered in the definition of air travel agent service and are different from the services provided in relation to booking of passage for travel by air. 12.2. Learned Special Counsel submits further that this finding is fully supported by the Order dated 24.9.2013 of the Secretary of the Ministry of Civil Aviation, GOI, which has allowed the payment of remuneration like convenience fee, transaction fee to the travel agent for their services of booking the ticket on behalf of the airlines on the condition that such fees will be included in the tariff within 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 sai....
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....ight schedules, departure and arrival timings and such other information as may be relevant for the passenger's travel; these services are clearly post-booking of tickets and are provided on behalf of the airlines; the appellant's status as mere agent of the airlines is again clearly corroborated by paras 5.2 and 5.3 of the Master User Agreement. Which provides that the appellant acts as a booking agent and facilitator of services on behalf of third-party service provider and hence it shall not have any liability or any aspect of the arrangements between the service provider and the user. 14. Learned Special Counsel submits that Section 65A (1) of the finance Act stipulates that classification 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 fa....
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....on their own on cancellation charges w.e.f 1.7.2012, though they continued to pay service tax on air travel agent service under Rule 6(7) only. 15.1. Learned Special Counsel submits that the appellant's averment that cancellation charges are in the nature of penal charges or liquidated damages and hence not liable to service tax is rightly rejected by the Commissioner; commissioner observed that the appellant did not have any right to levy any penal charges for cancellation; charges were received from the passengers for facilitating the cancellation of tickets and helping them to obtain refunds from the airlines; there are no agreements with the passengers for charging any penalty in the 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....
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.... and one audit in 2010 that the department had known all activities of the appellant; it is all the more difficult because convenience fee or ticket cancellation fee h were not mentioned in the invoices or in the financial records; the appellant has also admitted that these were recovered under general heading 'Taxes, fees and surcharge'; the evasion has been detected by the DGCEI on the basis of intelligence; the appellant did not perform their legal obligation of declaring the above two services, its taxable value in the statutory returns ST-3and did not pay service tax payable thereon; the case law relied upon by appellant are not directly applicable to the present case as they lay down general 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 bel....
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....t of the Air Travel Agent Service and are in the nature of consideration received by them towards the "Business Auxiliary Service" rendered by them to the airlines, before 01.07.2012 and as a consideration towards taxable service after 01.07.2012; the appellants being the agent of the airlines and being bound by the agreement with the airlines, any consideration paid to them or received by them is to be treated as amounts paid by the service recipient i.e. the airlines. It is the defence of the appellants that there are no different services and different considerations are being received by them for the very same service i.e. Air Travel Agent Service and that they are availing the option available under Rule 6(7) of Service Tax Rules; even if it is assumed that there are different 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 "cance....
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....ns any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person - (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; or (iii) guarantees for collection or payment for such goods or services; or (iv) undertakes any activities relating to such sale or purchase of such goods or services; (b) excisable goods" has the meaning assigned to it in clause (d) of section 2 of the Central Excise Act, 1944(1 of 1944); (c) "manufacture" has the meaning assigned to it in clause (f) of section 2 of the Central Excise Act, 1944(1 of 1944). 20.5. Section 67(k) of Finance Act, 1994 provides that in relation to service provided by an 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 suc....
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....ers, they do not become entitled to any commission. Their commission is entirely depended on and connected with the passage they book for the customers. It cannot, therefore, be said that the commission that the air travel agents get from the airlines is independent of and distinct from the services that they provide to the air-travellers and are relatable to the business that they provide to the airlines. On the other hand, since there is no guarantee money given or no fixed commission given, which has no nexus with the bookings that an air travel agent achieves for the airlines, it has to be said that the air travel agent's commission is integrally connected with the booking that he makes and in the process the services that he gives to the customers. [.....] In our opinion, therefore, the commission that the air travel agents get is on account of this service because in the absence of this service being given to the customers, an 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, t....
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....t have proper reasons for charge of convenience fee or service fee for booking air ticket, re-issue, re-booking/ amendment fee of air ticket, when they were already earning commissions for the same from airlines; the reasoning given by the appellants that they are providing convenience to the passengers for online ticket, is not plausible; it appears that they are earning commission for the services provided to the airlines and the passengers; nobody charges any amount without providing any service and nobody charges fees for the same service from two persons i.e. one from airlines and another from passengers; it appears that the appellants are charging convenience fee/ service fee from the passengers for some other services not in relation to booking of passage for travel by air; in case, the appellants charges these fees for issuing tickets on behalf of airlines, they were required to form part of air tariff i.e. basic fare and service tax 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 ca....
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....h evidence. It is a fallacy on the part of the Department to see every amount or payment received by the assessee is necessarily for and towards a consideration for provision of some service or the other. 26. We find that Tribunal has been consistent in holding that the charge of provision of "Business Auxiliary Service" cannot be slapped without identifying a particular sub-clause thereof. It may be argued that once the word "Business Auxiliary Service" is mentioned, the appellant is put to notice on the purport of the SCN and thereby an opportunity to defend himself is given. However, as seen above, the SCN, considers the charges collected by the appellant to be remuneration, at times to be for "some service" and at times to be for "Business Auxiliary Service". Tribunal in the case of M/s. Marubeni India Pvt Ltd (Supra). 6. Admittedly, the show cause notice proposed demand of duty under Business Auxiliary service and it is only during adjudication 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 ....
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....As regards the service tax demand on the cancellation charges, these charges are collected from the persons booking the air ticket and this is not the amount received from the appellant's client - the airlines. It is not disputed that in respect of cancelled tickets, the airlines do not give any commission whatsoever to the appellant. In view of this, we hold that no service tax would be payable under Section 65(105) (l) of the Finance Act, 1994 on the cancellation charges which are a part of the airfare received by the appellant from the persons booking the air ticket who, subsequently, had cancelled the same. Moreover, in any case, in terms of exemption Notification No. 22/97-S.T., dated 26-6-1997 the amount received by the air travel agent, which is in excess of the commission received by him from the airline for the booking of passage for travel by air, was exempt from service tax and in terms of this exemption notification no service tax would be leviable on the cancellation 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 appellan....
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....ty or service has a specific characteristic of a particular service, the same can not be classified under a general category. We are of the considered opinion that the service that the appellants are rendering, is classifiable as Air Travel Agents Service. 32. We find that the larger Bench of the Tribunal in the case of Kafila Hospitality and Travels Pvt. Ltd. (supra) held that: 70. The two competing entries are "air travel agent" service and "BAS". It would be seen from the definition of "air travel agent" that it includes all services connected with or in relation to the booking of passage for travel by air. The services in question are booking of airlines tickets and for 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. 71. This apart, the definition 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 ....
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....ers of services such as hotel accommodation, tour and travel, transportation etc. to provide the facility of cancellation of the intended supplies within a certain time period on payment of cancellation fee. Cancellation fee can be considered as the charges for the costs involved in making arrangements for the intended supply and the costs involved in cancellation of the supply, such as in cancellation of reserved tickets by the Indian Railways. 11.2. Services such as transportation travel and tour constitute a bundle of services. The transportation service, for instance, starts with booking of the ticket for travel and lasts at least till exit of the passenger from the destination terminal. All services such as making available an online portal or convenient booking counters with basic facilities at the transportation terminal or in the city, to reserve the seats and issue tickets for reserved seats much in advance of the travel, giving preferred seats with or without extra cost, lounge and waiting room facilities 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....
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.... pertinent to note that the definition does not define the service to be just booking ticket but a service provided or to be provided by an Air Travel Agent in relation to the booking of passage for travel by air. Even going by the definition, it can not be said that the activities are not in relation to the service as an air travel agent. After analysing the facts of the case, statutory provisions, judicial pronouncements, as discussed above, we are of the considered opinion, that the 'Convenience fee' and 'Cancellation Charges' collected by the appellants are towards the service rendered by them as an Air Travel Agent only and no other service is rendered by the appellant either to the customer or the airlines. The liability to Service Tax having been discharged, as a percentage of base fare under Rule 6(7) of Service tax Rules, no additional liability can be fastened to the appellant before 01-07-2012 i.e. before the negative list regime has been put in place. We also find that the Notification No.22/1997-ST dated 22.06.1997 is applicable to the appellants as the amounts received are nothing but consideration received in the rendering of the service as Air Travel Agent. 37. C....
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....ant 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; airlines have nothing to do with the charges collected by the appellant; service or tolerance, if any, flows from the appellant to the customer, who pays the consideration. Post 1.7.2012 also an option has been given to the appellants to pay service tax at the rate prescribed under Section 66 / 66B of the Act on the value of services as determined in terms of Section 67 of the Finance Act read with Service Tax (Determination of Value) Rules, 2006 ("Valuation Rules') or as a percentage of Basic fare under Rule 6(7) of the Service Tax Rules. 39. We are in agreement with the contention of the appellants that if "convenience fee" is to be treated as "consideration" then the activity for which it is to be treated so is the activity of facilitating the online booking of air tickets; this facilitating activity is in relation to the services of booking of....
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....modation and the resultant package would be treated as services naturally bundled in the ordinary course of business. We find in view of the above, the activities undertaken by the appellant are treated as separate services can be bundled together and be classified as Air Travel Agent Service. We find that Tribunal in the case of Mody Education Foundation (Supra)held that Hostel services and education services provided by boarding school are naturally bundled in ordinary course of business; education service gives essential character to such bundle. We are in agreement with the appellants claim that the principle is squarely applicable in the instant case since service of online booking for which convenience fee is charged is naturally bundled with service of booking tickets and the service of booking tickets gives essential character to such bundle. Therefore, the benefit of Rule 6(7) which is available to service of booking tickets is also available to the service of online booking. 42. It is the contention of the department that the convenience fee is not added to the basic fare. We find that Rule 6(7) of the Service Tax Rules does not provide for such inclusion. In view of o....
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.... through the submissions of Revenue and the case law relied upon by them. In view of the discussion as above, we do not find any force in the submissions on behalf of the Revenue. We are of the considered opinion that the 'Convenience Fee' and 'Cancellation Fee' are not relatable to any other service provided by the appellant and the Service Tax being discharged in terms of Rule 6(7) of Service Tax Rules, 2006, no additional liability of Service Tax can be fastened to the appellant on account of 'Convenience Fee' and 'Cancellation Fee' either before or after 01-07-2012. The appeals succeed squarely on merits. 46. Learned Counsel for the appellants also based his submissions on limitation. He submits that in the past the Department has been invoking extended period in the notices, the SCN issued in the present case which is a subsequent Show-Cause Notice, extended period of limitation cannot be invoked at all; 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 and therefore, extended period is not invokab....