2017 (11) TMI 1109 - AT - Service Tax

Business Auxiliary Services - Commission received from airlines - Held that - the tax liability on similar activities under the category of Business Auxiliary Service has already come up for consideration before the Tribunal in the case of DHL Logistics (P) Ltd. Vs CCE, Mumbai-II 2017 (8) TMI 600 - CESTAT MUMBAI , where it was held that This activities can be no stretch of imagination by considered as BAS as for any service to statute the BAS at least three parties should be involved in the transaction namely the service provider, service recipient and the client. There are only two parties in the transaction, the seller of space and the buyer of space. Any commission/incentive received, as a result of this transaction of sale cannot be considered as supply of BAS - appeal dismissed - decided against Revenue.

Summary

Issues:
Tax liability under 'Business Auxiliary Service' for the period 01.07.2003 to 31.03.2007.

Analysis:
The appeal was filed by the Revenue against the Order-in-Original passed by the Commissioner of Central Excise, Delhi-III. The dispute revolved around the tax liability of the assessee-Respondents under the category of 'Business Auxiliary Service' for a specific period. The assessee-Respondents, engaged in activities as Customs House Agent and Freight Forwarder, earned income from selling space in aircraft and receiving commissions from airlines. The Revenue sought to tax both incomes under 'Business Auxiliary Services' as consideration for promoting another person's services. The original authority ruled that tax liability existed only for commissions received from airlines starting from a certain date. The Revenue challenged this decision, arguing that the assessee-Respondents were liable for the entire period due to the broad scope of the tax entry under Section 65(19) of the Finance Act, 1994.

The Revenue contended that the original authority misinterpreted the scope of the tax entry under 'Business Auxiliary Service' and that the assessee-Respondents should be liable to pay Service Tax for the entire demand period. On the other hand, the counsel for the assessee-Respondents defended the impugned order by referring to previous Tribunal cases where similar activities were not considered taxable under 'Business Auxiliary Service.' The Tribunal had previously ruled that no tax liability existed on the incomes earned by the assessee-Respondents from selling pre-booked space in aircraft and receiving commissions from airlines.

After considering both arguments and examining the material on record, the Tribunal referred to previous cases where it was held that the activities of the assessee-Respondents did not fall under 'Business Auxiliary Service.' The Tribunal emphasized that for a demand under 'Business Auxiliary Service' to be sustained, a third party, namely a client, must be involved in the transaction. Since the activities in question did not involve a third party and were conducted for the assessee-Respondents' own trading activities, the demand for Service Tax under 'Business Auxiliary Service' was set aside. The Tribunal dismissed the Revenue's appeal as the issue had already been decided in favor of the assessee-Respondents in previous Tribunal orders.

In conclusion, the Tribunal upheld the decisions of previous cases where it was established that the activities of the assessee-Respondents did not attract tax liability under 'Business Auxiliary Service.' The appeal filed by the Revenue was dismissed based on the precedents set by the Tribunal in similar cases.