2017 (3) TMI 792 - AT - Service Tax

Natural justice - air travel agent service - short payment of tax - Held that - the Original Authority passed ex-parte order though he recorded that adequate opportunities have been provided to the appellant. The impugned order also did not examine the issues raised by the appellant for a proper finding - when the appellants have discharged service tax as a travel agents in terms of provisions of Rule 6 (7) of Service Tax Rules, 1994 and submitted supporting documents of income received on sale of tickets, the same is required to be scrutinized for correctness. Additional service tax demand cannot be confirmed only on the ground of certain categories of income are indicated in the profit and loss account of the appellant - Similarly, on the tax liability on the commission income for use of CRS, the learned Commissioner (Appeals) did not arrive at a clear finding as to what kind of promotion or marketing of such CRS and to which client, is being made by the appellant - matter requires reconsideration - appeal allowed by way of remand.

Summary

Issues:
Dispute over short payment of service tax by appellant during 2003-2007; Service tax categories: "Rent a Cab Operator Service", "Rail Travel Agents Service", "Business Auxiliary Service"; Confirmation of service tax demand by Original Authority and Commissioner (Appeals); Allegation of inadequate examination of documents by Original Authority and First Appellate Authority; Lack of detailed discussion on legal provisions and data submitted by appellant; Allegation of summary findings in impugned order; Appellant's contention on correct service tax discharge under Rule 6 (7) of Service Tax Rules, 1994; Lack of clear finding on promotion of CRS by appellant; Requirement of three-party arrangement in Business Auxiliary Service transactions.

Analysis:
The appeal in this case pertains to a dispute regarding the short payment of service tax by the appellant air travel agency for the years 2003-2007 under categories including "Rent a Cab Operator Service", "Rail Travel Agents Service", and "Business Auxiliary Service". The Revenue alleged that the appellant had not discharged service tax on various receipts as per their profit and loss account. The Original Authority confirmed a service tax demand of ?12,94,443/- along with penalties, which was upheld by the Commissioner (Appeals) who imposed additional penalties. The appellant contended that they had correctly discharged service tax as Air Travel Agents under Rule 6 (7) of Service Tax Rules, 1994, and had all necessary details regarding their income.

The appellant argued that the original and appellate orders lacked detailed examination of the documents submitted by them and were based on presumptive and summary findings. They highlighted that the orders did not clearly address the promotion of CRS by the appellant and the nature of Business Auxiliary Service provided. The Tribunal agreed with the appellant's submissions, noting the deficiencies in the orders and the need for a thorough scrutiny of the appellant's income documents. The Tribunal found the findings in the impugned order to be untenable and remanded the matter back to the Original Authority for a fresh decision, emphasizing the importance of providing the appellant with an opportunity to present supporting evidence.

In conclusion, the Tribunal allowed the appeal by way of remand, setting aside the impugned order due to serious infirmities in factual and legal issues. The case highlights the significance of a detailed examination of documents and legal provisions in tax disputes, ensuring a fair and thorough consideration of the appellant's contentions.