2019 (9) TMI 1421 - AT - Service Tax

Business Auxiliary Service - overriding commission received from their principal i.e. Airline during the period 2004-05 - N/N. 13/2003-S.T., dated 20-6-2003 effective from 1-7-2003 - HELD THAT - The demand is raised on overriding commission received by the appellant from KLM Royal Dutch Airlines in the course of Air Travel Agent Service. The department has demanded the service tax on the commission received by the appellant. The relevant period is 2004-05 during which the commission agent was defined as per Notification No. 13/2003-S.T. - the definition of Commission Agent was existing till 15-5-2005. As per the above the commission related to service was not taxable as per definition of Commission Agent Service. Therefore, the Service of Commission Agent of the appellant was not taxable during the relevant period, consequently demand is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Taxability of overriding commission received by the appellant from the principal under the head of "Business Auxiliary Service" during the period 2004-05.

Analysis:
The case revolved around the taxability of the overriding commission received by the appellant, who acted as a General Sales Agent of KLM Royal Dutch Airline, during the period 2004-05. The appellant received the commission from their principal, the Airline, and the Department raised a demand considering it as overriding commission under the head of "Business Auxiliary Service." The appellant contended that the commission related to the service was not taxable during the relevant period. The Ld. Chartered Accountant for the appellant referred to the definition existing as per Notification No. 13/2003-S.T., dated 20-6-2003, which was effective from 1-7-2003. He also highlighted the amended definition of commission effective from 16-5-2005. The appellant argued that the commission related to the service of an Air Travel Agent was not taxable during the relevant time.

The Revenue, represented by the Ld. Counsel Superintendant, reiterated the findings of the impugned order, supporting the tax demand on the commission received by the appellant. Upon hearing both sides and examining the records, the Tribunal found that the demand was raised on the overriding commission received by the appellant from KLM Royal Dutch Airlines in the course of Air Travel Agent Service during 2004-05. The department sought to impose service tax on this commission. The Tribunal noted that the definition of a commission agent, as per Notification No. 13/2003-S.T., was applicable until 15-5-2005. According to this definition, the commission related to service was not taxable. Therefore, the Tribunal concluded that the service of the commission agent of the appellant was not taxable during the relevant period, rendering the demand unsustainable.

In light of the above analysis, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The decision was dictated and pronounced in the open court, providing relief to the appellant regarding the taxability of the commission received during the specified period.