2014 (8) TMI 592 - AT - Service Tax

Computer Reservation System (CRS / GDS) - services relating to the reservation of ticket availability position through on line computer system - whether Online Database Access or retrieval Service was received by the appellant from foreign based CRS service provider and liable to service tax in terms of section 66A of the Finance Act, 1994 on reverse charge mechanism basis - Difference of opinion - Majority order - Held that - The said services were being received in respect of various computer reservation system from various CRS companies like M/s. Galilio International Partnership, USA; M/s. Abacus Distribution System Pvt. Ltd. Singapore, M/s. Amadeus Marketing SA Spain, and M/s. Sabre Travel Information Network etc. Said services were being provided by M/s. CRS or GDS Company to the head office of the air lines in terms of agreement entered between them and their head office. The above matters were heard by the undersigned as Third Member along with difference of opinion in the matter of British Airways 2014 (6) TMI 626 - CESTAT NEW DELHI (LB) - the matter on merits as also on limitation was in favor of assessee - By adopting the final decision of British Airways vide my Order 2014 (6) TMI 626 - CESTAT NEW DELHI (LB) demand set aside - Decided in favor of assessee.

Summary

Issues Involved:
1. Whether the appellant, operating as a branch in India, was liable to service tax for 'Online Database Access or Retrieval Service' received from foreign CRS service providers under section 66A of the Finance Act, 1994.
2. Whether the extended period of limitation under proviso to section 73(1) of the Finance Act, 1994 was invokable.
3. Whether penalties under sections 77 and 78 of the Finance Act, 1994 were applicable.

Issue-wise Detailed Analysis:

1. Liability to Service Tax:
The core issue was whether the appellant, a branch of Thai Airways in India, was liable to service tax for services received from foreign-based Computer Reservation System (CRS) providers under section 66A of the Finance Act, 1994. The services in question involved online database access and retrieval, facilitating reservation and ticket availability for air travel agents in India. The Revenue argued that the appellant received these services and was liable to pay service tax on a reverse charge mechanism basis. The appellant contended that the services were provided to their head office in Bangkok and not directly to them, thus they were not liable for service tax in India.

The Tribunal examined the agreements between the head office and the CRS providers, concluding that the appellant in India was indeed the recipient of the services. The services facilitated the booking of tickets by travel agents in India, benefiting the appellant's business operations in India. Consequently, the Tribunal upheld the Revenue's view that the appellant was liable to pay service tax under section 66A of the Act.

2. Extended Period of Limitation:
The appellant challenged the invocation of the extended period of limitation, arguing that they had a bona fide belief of non-liability under section 66A and had not suppressed any facts. The Revenue countered that the appellant failed to register and file returns, thus deliberately evading tax liability.

The Tribunal found that the appellant's failure to register and file returns indicated an intention to evade tax, justifying the invocation of the extended period of limitation under proviso to section 73(1) of the Act. The Tribunal held that the extended period was applicable due to the appellant's suppression of facts and deliberate evasion.

3. Penalties:
The Tribunal examined whether penalties under sections 77 and 78 of the Finance Act, 1994 were applicable. The appellant argued that there was no suppression of facts or intention to evade tax, and that the proceedings were time-barred.

The Tribunal found that the appellant's actions constituted suppression of facts with intent to evade tax. Consequently, the penalties imposed under sections 77 and 78 were upheld. The Tribunal noted that the appellant's failure to register and file returns, coupled with the deliberate evasion of tax, warranted the imposition of penalties.

Separate Judgments:
The judgment included separate opinions from the members of the Tribunal. While the majority opinion upheld the Revenue's stance on all issues, one member dissented, arguing that the appellant was not the recipient of the services and thus not liable for service tax. The dissenting member also opined that the extended period of limitation and penalties were not applicable.

Conclusion:
The majority decision of the Tribunal concluded that the appellant was liable to pay service tax for the services received from foreign CRS providers under section 66A of the Finance Act, 1994. The extended period of limitation was applicable due to the appellant's suppression of facts and deliberate evasion of tax. Penalties under sections 77 and 78 were also upheld. The appeals were dismissed, and the adjudication order was sustained.