2008 (5) TMI 112 - AT - Service Tax

Appellants are air cargo agents of various airlines receiving commission from various airlines for booking cargo on their behalf - appellants has fairly accepted the position that air cargo agents and air travel agents stand on the same footing insofar as their relation with airlines is concerned hence prima facie appellant are liable to pay tax in the category of Business Auxiliary Service moreover, no financial hardship pleaded pre-deposit ordered

Summary

Issues:
1. Service tax demand on air cargo agents for the period 1-4-2003 to 31-3-2006.
2. Liability to pay service tax on commission received from airlines.
3. Plea of limitation against the demand of service tax.

Analysis:

Issue 1: Service tax demand on air cargo agents for the period 1-4-2003 to 31-3-2006
The appellants, who are air cargo agents of various airlines and members of IATA, were faced with a confirmed demand of service tax amounting to Rs. 93,11,332/- along with Education Cess for the period 1-4-2003 to 31-3-2006. The demand was based on the commission received by the appellants from airlines for booking cargo and collecting freight charges from consignees. The demand was in the category of Business Auxiliary Service under Section 65(19) of the Finance Act, 1994. The Tribunal considered the period from 1-7-2003 to 31-3-2006 as the period of dispute and found the appellants prima facie liable to pay service tax on the commission received from airlines.

Issue 2: Liability to pay service tax on commission received from airlines
The appellants' liability to pay service tax on the commission received from airlines was established based on previous decisions where similar air travel agents were held liable for service tax on overriding commission received from airlines. The Tribunal noted that the appellants' commission from airlines fell under the category of Business Auxiliary Service, making them liable for service tax during the period of dispute.

Issue 3: Plea of limitation against the demand of service tax
The appellants raised a plea of limitation against the demand of service tax, arguing that the extended period of limitation should not be invoked as there was no suppression on their part. The appellants contended that the order of the Director-General of Service Tax (DGST), which was relied upon by the Commissioner, should not have legal consequences after the withdrawal of the High Court's direction. However, the Tribunal found that there was no mention of suppression in the impugned order for the period prior to 10-9-04. The Tribunal directed the appellants to pre-deposit a specified amount within a given timeframe, considering the circumstances and lack of plea of financial hardships.

This detailed analysis of the judgment provides insights into the issues of service tax demand, liability on commission received, and plea of limitation raised by the appellants before the Appellate Tribunal CESTAT, CHENNAI.