TaxTMI 
TaxTMI 
2025 (9) TMI 1086
X X X X Extracts X X X X
X X X X Extracts X X X X
.... provisions of Rule 6(7) of the Service Tax Rules 1994. During the disputed period from 01.04.2009 to 31.03.2012, the Appellant was an accredited agent of International Air Transport Association (IATA) and operated as an Air Travel Agent, providing ticketing services primarily to IATA member airlines. The Appellant's business model predominantly involved routing ticket bookings through a network of sub-agents, while the remaining bookings were undertaken directly by the Appellant. In consideration for the air ticketing services rendered, the appellant received a commission from the airlines. Where bookings were made through sub-agents, a major portion of this commission was passed on to them. Based on information gathered by DGCEI, an investigation was initiated against the appellant, wherein, the Department noted that the appellant had entered into a passenger sales agency agreement (PSA) with the IATA members. Based on consideration of the invoices issued by the appellant to sub-agents, the Department alleged that the appellant is collecting an amount representing service tax from the sub-agents. A show cause notice dated 19.10.2015 was issued under Section 73A (2) of the Act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hosen the option of "Basic Fare Model" and accordingly, discharged the service tax liability on the entire amount of basic fare in terms of Rule 6(7) of Service Tax Rules, 1994.Theappellant had neither collected service tax without authority of law nor withheld the same. Consequently, the invocation of Section 73A of the Act in the present case was not warranted. 3.2 Learned Chartered Accountant further submitted that the appellant had already borne the incidence of tax on the commission charged from the airlines, which was not in dispute as well. The Department's allegation that the appellant has collected an amount as service tax from the sub-agents, does not hold good as the appellant was a service recipient and not the service provider. Moreover, the amount alleged to be collected as tax is paid to the Govt. ex-chequer by the sub-agents. Learned Chartered Accountant further stated that the adjudicating authority had treated the transaction between the Appellant and sub-agents as a separate transaction from the transaction between the Appellant and Airlines, whereas it was the same transaction which was being passed on to the sub-agents along with the commission e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ernational airlines; the appellant and IATA entered into an agreement dated 15.05.1994 titled as "Passenger Sales Agency Agreement" for sale of tickets of member airlines; the appellant also entered into various "Productivity Linked Bonus Agreements" with the airlines under which the appellant facilitates the sale of airline tickets of member airlines by undertaking activities, including but not limited to, advising the conditions of carriage, tariffs, itineries, availability of tickets, and receives consideration from the customers/sub-agents; being an accredited IATA agent, the appellant is bound by the rules and regulations of IATA, including the manner of billing and settlements through the Billing and Settlement Plan; and the appellant receives commission from the airlines for the sale of tickets. 3. The appellant claims that as it had to discharge service tax on the commission received from the airlines under the category of "air travel agent services", it had the following two options available under section 68 of the Finance Act and the Service Tax Rules, 1994: (i) Commission Model under section 68 of the Finance Act- Under this model, servi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ollected from the sub-agents that was sought to be recovered from the appellant under section 73A (2) of the Finance Act with interest under section 73B of the Finance Act................" 6.2 Thereafter, on examination of the facts and the submissions made by the appellant and the Department, the Tribunal decided as follows:- "16. The second issue that arises for consideration is whether the appellant rendered air travel agent services to the airlines as contended by the department or the appellant rendered this service to the sub-agents or customers as contended by the appellant. 17. The department alleges that the appellant provided services to the airlines and the appellant received consideration/commission from the airlines for this service. The contention of the appellant is that the appellant does not provide any service to the airlines and the commission that it receives from the airlines is for the service that the appellant provides to the sub-agents. 18. The appellant is an accredited IATA agent in terms of the agreement titled "Passenger Sales Agency Agreement" dated 15.05.1994 for sale of ticket of member airlines. The appellan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the sub-agents. 29. The contention of the learned counsel for the appellant is that no illegality was committed in recovery of service tax from the subagents. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 32. It has, therefore, to be examined whether the appellant rendered any service to the airlines or services were rendered by the appellant only to the sub-agents. To appreciate this issue, it would be pertinent to refer to the decision of the Madras High Court in Airlines Agents Association vs. Union of India. It was sought to be contended by the Airlines Agents Association that air travel agents were promoting the business of the airlines and in consideration of such services the airlines were paying commission to the air travel agents. It was also contended that the commission received from the airlines had nothing to do with the services offered by the air travel agents to the passengers. The Madras High Court did not accept these two contentions and held that it was the air travel agents who were rendering services to the passengers. The High Court, therefore, held that the commission paid to the air travel agents by the ....