2018 (7) TMI 701 - AT - Service Tax

Business Auxiliary Service - use of Computer Reservation System - Galileo Software in their business for Centralized Reservation Centre system - Penalties - Held that - The issue whether the appellant is liable to service tax for the use of AMADEUS software has been settled by the decision of the Tribunal in the case of D. Pauls Consumer Benefit Ltd. Vs. Commissioner of Central Excise, New Delhi 2017 (3) TMI 1019 - CESTAT NEW DELHI , where it was held that the service provided by the assessee-Appellants has rightly been covered under the heading Business Auxiliary Service as defined u/s 65(19) of the FA, 1994 - levy of service tax upheld. There is no iota of evidence adduced by the department to establish that the appellant has suppressed facts with intent to evade payment of service tax. Further, the issue was under litigation before the Tribunal and had been thereafter decided wherein it was held that the said amounts received are taxable - penalty do not sustain. The impugned order is modified to the extent of setting aside the penalties without disturbing the demand of service tax or the interest thereon - Appeal allowed in part.

Summary

Issues:
1. Whether the income received by the appellants from M/s.Galileo India Pvt. Ltd. for using 'Computer Reservation System - Galileo Software' is subject to levy of service tax under Business Auxiliary Service.
2. Whether the show cause notice issued invoking an extended period can sustain due to suppression of facts.
3. Whether the penalty imposed on the appellants is justified.

Analysis:
1. The appellants, IATA accredited air travel agents, received income as an incentive from M/s.Galileo India Pvt. Ltd. for using 'Computer Reservation System - Galileo Software.' The department contended that this income is subject to service tax under Business Auxiliary Service. The appellants argued that they were merely subscribers to the software and not obligated to promote it, hence the incentive should not be taxable. The Tribunal referenced a similar case and held that the income received is indeed taxable. However, the Tribunal found no evidence of intentional suppression of facts by the appellants and considered their argument valid. Consequently, the penalty was waived under section 80 of the Finance Act, 1994.

2. The show cause notice was issued for the period from 2004-05 to 2007-08, dated 16.9.2008, invoking an extended period. The department alleged suppression of facts to evade service tax payment. The Tribunal noted that the issue of service tax liability for using the software had been previously litigated and decided in favor of taxation. However, the Tribunal found no proof of deliberate concealment of facts by the appellants. As a result, the penalty was waived based on the reasonable cause presented by the appellants.

3. The Commissioner (Appeals) had upheld the demand, interest, and penalty imposed on the appellants. The appellants challenged this decision before the Tribunal. The Tribunal, after considering the arguments from both sides, upheld the demand for service tax but set aside the penalties without disturbing the demand or interest. The Tribunal's decision was based on the lack of evidence supporting intentional evasion of service tax by the appellants, leading to the waiver of penalties under section 80 of the Finance Act, 1994.