2017 (9) TMI 1195 - AT - Service Tax

Business Auxiliary Services - use of Computer Reservation System (CRS) of M/s Amadeus India for booking tickets - case of appellant is that there is no marketing done by the appellant for the CRS - Held that - The CCRS are providing these incentives either for achieving the targeted booking of air tickets or for loyalty for booking of air tickets using their software system. Thus, the service provided by CCRS is to the Airlines and Air Travel Agent is promoting the service provided by CCRS to Airlines - the service provided by the ATAs to CCRS is neither covered in the negative list (Section 66D of the Finance Act, 1994) nor exempt by a notification. Therefore, service tax is leviable on the same - appeal dismissed - decided against appellant.

Summary

Issues:
Interpretation of service tax liability on incentives received by Air Travel Agents from Computer Reservation System (CRS) companies.

Analysis:
The case involved a dispute regarding the service tax liability of an assessee-appellant registered under "Air Travel Agent's Services" category, who received incentives from a CRS company for booking segments during a disputed period. The lower authorities categorized the services provided by the assessee-appellants as falling under Business Auxiliary Service, demanding service tax along with interest and penalties. The appellant challenged this decision by filing an appeal against Order-in-Original No.279/2012 dated 12.10.2012.

During the proceedings, the appellant did not appear, and the Departmental Representative (DR) represented the Revenue. The DR highlighted a previous Tribunal decision in a similar case, favoring the Revenue. The appellant argued in the appeal that they did not market the CRS, had tied up with airlines, and did not charge customers for using the CRS software. They contended that the customers were unaware of the system used for ticket booking, and they were not promoting the CRS companies' business.

The Tribunal examined the issue and referred to the previous decision, emphasizing that the assessee-appellants, as travel agents, were liable to pay service tax for providing tickets for air and railways. The Tribunal noted that the GDS/CRS companies provided essential computers and software to travel agents for booking tickets, receiving incentives for each segment booked. Consequently, the services provided by the assessee-appellants were correctly classified under Business Auxiliary Service. The Tribunal distinguished the case law cited by the appellant, stating it was not applicable to the present scenario.

Additionally, the Tribunal referenced the 'Central Excise, Customs & Service Tax Budget, 2016-17,' clarifying that incentives received by Air Travel Agents from CRS companies were for using the software and platform provided by the CRS. As the service provided by the ATAs to CRS was not covered in the negative list nor exempted by notification, service tax was deemed leviable on the incentives received.

Ultimately, the Tribunal upheld the impugned order, dismissing the appeal based on the precedent set by the previous decision and the clarification regarding service tax liability on incentives received by Air Travel Agents from CRS companies.

This comprehensive analysis of the judgment provides a detailed overview of the issues involved and the Tribunal's reasoning in deciding the service tax liability matter concerning incentives received by Air Travel Agents from CRS companies.