2018 (5) TMI 1121 - AT - Service Tax

Business Auxiliary Services - it was alleged that respondent had earned commission on sale of air tickets and insurance/other service for a total value of ₹ 27,31,732/- but failed to discharge tax liability of ₹ 1,06,147/- as provider of 'business auxiliary service' - Held that - the respondent made bulk purchases of air tickets that were then assigned at market price to various successful candidates proceeding abroad - Tribunal in Greenwich Meridian Logistics (India) Pvt. Ltd v. Commissioner of Excise 2016 (4) TMI 547 - CESTAT MUMBAI has held that a similar transaction in relation to cargo creates profit on sale and is not a consideration for taxable service. The provisions of Finance Act, 1994 are very clear; it is the service that is taxable and not a money transaction between two entities - Revenue has not been able to establish that the said activity of purchasing seats which have been sold to individual travelers are liable to be covered by the definition of 'business auxiliary service' in section 65(19) of Finance Act, 1994. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Dropping of demand of ?6,51,038/- as provider of 'manpower recruitment and supply agency service' and ?4,66,710/- as provider of 'business auxiliary service' along with interest and penalties.
- Tax liability on remittances from abroad and earnings from workers.
- Alleged failure to discharge tax liability as provider of 'business auxiliary service.'
- Exemption notification for service providers earning in foreign exchange.
- Taxability of commission received on booking of cargo on airlines.
- Interpretation of 'business auxiliary service' under section 65(19) of Finance Act, 1994.

Analysis:

1. The appeal challenges the dropping of demand against M/s Jasper International for 'manpower recruitment and supply agency service' and 'business auxiliary service' along with interest and penalties. The original authority confirmed a liability of ?6,51,038/- for 'manpower recruitment and supply agency service' and ?1,06,147/- for 'business auxiliary service.' The impugned order relied on various decisions and circulars to support the dropping of demand.

2. The case involves tax liability on remittances from abroad and earnings from workers. The original authority confirmed a liability of ?6,51,038/- for 'manpower recruitment and supply agency service' and ?1,06,147/- for 'business auxiliary service.' The impugned order considered lack of documentary or oral corroboration for the tax liability, rendering the demand not tenable.

3. The issue of exemption notification for service providers earning in foreign exchange was raised. The original authority ordered recovery based on the absence of an exemption notification between specific dates. However, the first appellate authority dropped the demand, stating that the transaction sought to be taxed was not covered within the scope of 'commission agency.'

4. The taxability of commission received on booking of cargo on airlines was contested. The Learned Authorised Representative argued that the commission received on booking of cargo and purchase of insurance was liable to tax. However, the first appellate authority concluded that the tax liability cannot be based solely on statements without corroborative evidence.

5. The interpretation of 'business auxiliary service' under section 65(19) of Finance Act, 1994 was a crucial aspect. The Revenue contended that the gap between purchase and selling price of air tickets constituted 'agency commission' taxable under 'business auxiliary service.' However, the Tribunal disagreed, citing previous decisions and the clear provisions of the Finance Act, 1994.

6. The Tribunal dismissed the appeal, upholding the findings in the impugned order. The decision was based on the lack of evidence to support tax liability and the clear interpretation of taxable services under the Finance Act, 1994.