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2017 (10) TMI 506 - AT - Service TaxBusiness Auxiliary Services - appellants are rendering services of air travel agent to their customers and are registered with service tax department and utilized computer reservation software provided by Galileo for booking of air tickets for their customers - Held that - there is a special relationship between the appellant and M/s. Galileo whose CRS system the appellant is using. The incentive which has been called by the Department as commission is the consideration for giving certain kind of marketing and promotional support to the software product (CRS / GDS) pertaining to Galileo - any service which is incidental or ancillary to any activity specified in sub clause (i) & (ii) of the definition which pertain to promotion or marketing or sale of goods produced / provided pertaining to the client or promotion or marketing of services provided by the client (here it is Galileo) would be covered under the definition of Business Auxiliary Services and the consideration received for said services will be chargeable to service tax under Business Auxiliary Services . The Tribunal in the case of D. Pauls Consumer Benefit Consumer Benefit Ltd. Vs. CCE New Delhi 2017 (3) TMI 1019 - CESTAT NEW DELHI has held that such services as provided by the present assessee / appellant is covered by the category of Business Auxiliary Services as defined under section 65 of the Finance Act 1994. Penalty u/s 78 - Held that - In the present case, the demand confirmed is of ₹ 2,59,195/- whereas the penalty has been imposed of ₹ 3 lakhs, the said penalty therefore, is reduced to ₹ 2,59,195/- - the appellant is given the benefit of option to discharge 25% of penalty on fulfillment of the conditions provided under Section 78 of the Finance Act. Appeal allowed in part.
Issues:
Service tax liability on incentive received from Galileo India Pvt. Ltd. by the appellant assessee for using their CRS system. Analysis: The appellant, a travel agent, received an incentive from Galileo India Pvt. Ltd. for using their Computer Reservation Software (CRS) system. The Department contended that this incentive falls under 'business auxiliary services' and attracts service tax. The impugned order confirmed the demand of service tax along with interest and imposed a penalty of ?3 lakhs. The appellant appealed to the Tribunal challenging this decision. The appellant argued that they did not engage in promotional or marketing activities for Galileo and did not act as an agent of Galileo. They highlighted that the CRS system was provided free of cost by Galileo, and there was no evidence of marketing or promotion activities in India. The appellant's advocate emphasized that the appellant did not conduct any activity falling under 'business auxiliary services.' After considering the submissions and documents presented, the Tribunal observed a marketing and promotional relationship between the appellant and Galileo. The offer document between M/s. Dalmia Cement Bharat Ltd. and InterGlobe Technology Quotient Private Ltd. indicated marketing and promotion activities in exchange for a support fee, supporting the Department's contention. The Tribunal noted a special relationship between the appellant and Galileo, where the incentive received was considered as commission for marketing and promotional support. The Tribunal referred to the definition of 'business auxiliary service' under Section 65(19) of the Finance Act 1994, which includes services related to the promotion or marketing of goods or services provided by the client. Citing a previous case, the Tribunal held that the appellant's activities fell under 'business auxiliary services' and were liable for service tax. The Tribunal also reduced the penalty imposed on the appellant in line with legal provisions, granting the appellant the option to pay a reduced penalty amount. In conclusion, the Tribunal upheld the impugned order, confirming the service tax liability on the incentive received from Galileo India Pvt. Ltd. by the appellant assessee. The penalty was revised, and the appellant was given the option to pay a reduced penalty amount. The appeal was disposed of accordingly.
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