2018 (2) TMI 82 - AT - Service Tax

Classification of services - Business Auxiliary Services or air travel agent service?- appellant is engaged in rendering of services as air travel agent and registered under the category of air travel agent services - Held that - the services rendered by the appellant it booking of passes for travel by air which is squarely covered by the definition of air travel agency service as defined under Section 65(105) - In view of the statutory definition, any activity in relation to booking of passes by air travel agent would be covered under air travel agency services . Whether the ticket is bought directly from the airline or through the GSA the same would not make any difference. Also, the issue squarely covered by the decision in the case of Commissioner of Central Excise, Goa v. Zuari Travel Corporation 2013 (7) TMI 911 - CESTAT MUMBAI , where it was held that The activity undertaken by respondent herein, who is a sub-agent of the IATA agent comes under Air Travel Agents Services or Business Auxiliary Services. The impugned order classifying the service under business auxiliary service is not sustainable in law - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of services rendered by the appellant under business auxiliary service, applicability of service tax on commission earned by the appellant, interpretation of statutory definition of air travel agency services.

Analysis:
1. The appellant filed two appeals against the order confirming the demand for service tax on services rendered under business auxiliary service. The appellant, an air travel agent, received commission from General Sales Agents (GSA) for selling air tickets. The appellant contended that the services should be classified under air travel agency services and are exempt under a specific notification. The Department initiated an investigation leading to a show cause notice proposing service tax demand on the commission earned by the appellant under business auxiliary service.

2. The adjudicating authority confirmed the demand and imposed penalties. The appellant challenged the order, arguing that the liability under air travel agent services had been discharged by the GSA, and subjecting the same commission to service tax under business auxiliary service was incorrect. The appellant relied on a Tribunal decision and a High Court judgment to support their argument regarding the nature of services provided.

3. The appellant emphasized that the impugned order did not consider the facts and laws properly and was contrary to binding judicial pronouncements. They highlighted that the services provided by the appellant fell under air travel agency services, and the commission had already been taxed by the GSA. The appellant also referred to a Circular emphasizing classification under specific categories over general ones.

4. The Revenue argued that the services rendered by the appellant promoted the business of GSA, justifying the classification under business auxiliary service. However, the Tribunal found that the services provided by the appellant in booking air travel passes fell within the definition of air travel agency services as per statutory provisions. The Tribunal also referred to a previous Division Bench decision supporting the appellant's position.

5. Ultimately, the Tribunal held that the impugned order classifying the services under business auxiliary service was not sustainable in law. The order was set aside, and the appeals of the appellant were allowed with consequential relief, if any.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the arguments presented and the Tribunal's decision based on statutory definitions and precedents.