2018 (7) TMI 1391 - AT - Service Tax

Liability of Tax - appellant s office in India for services received by them under the category of Online Information and Data Base Access Retrieval Service - Reverse Charge Mechanism - Held that - Such service has been received by the appellant in India from foreign based CRS Service provider. Such services were received on the basis of agreements executed by the Head Office of the appellant with the respective CRS Companies - The liability for payment of Service Tax on similar arrangements of various Foreign Airlines have been held to be not liable to payment of Service Tax on Reverse Charge Basis. Matter remanded to the Adjudicating Authority for de novo decision of the matter in the light of the various decisions on the matter - appeal allowed by way of remand.

Summary

Issues:
Tax liability of appellant's office in India for services received under 'Online Information and Data Base Access Retrieval Service' from foreign-based CRS Companies.

Analysis:
1. The appellant, an International Airline, is in dispute with the Revenue regarding the tax liability of its Indian office for services received under 'Online Information and Data Base Access Retrieval Service' from foreign-based CRS Companies. The demand was raised under the Reverse Charge Mechanism for the period from October 2006 to June 2012.

2. The appellant's counsel argued that based on previous Tribunal decisions, no Service Tax can be imposed on foreign airlines like the appellant for the period up to June 2012. Citing various cases, the counsel contended that the liability does not arise on the Indian office of the appellant.

3. The Revenue justified the tax demand, stating that the consideration for the services was paid by the Indian office, making them liable for Service Tax. The Adjudicating Authority highlighted that the Indian office was debited by the Head Office for the amount paid to the CRS Service Provider, justifying the levy of Service Tax.

4. The appellant's counsel argued that the relationship exists between the Head Office and CRS Companies, and since they are distinct legal persons, any debits against the Indian office should not be considered as taxable consideration. The counsel also disputed the findings of the Adjudicating Authority regarding the debits.

5. After reviewing the cited decisions, the Tribunal noted that similar cases involving Foreign Airlines had been held not liable for Service Tax on Reverse Charge Basis. However, discrepancies in the facts of the present case were pointed out, with the appellant's counsel asserting that the Adjudicating Authority had recorded incorrect facts.

6. Considering the arguments and discrepancies, the Tribunal set aside the impugned order and remanded the matter to the Adjudicating Authority for a fresh decision. The Authority was directed to allow the appellant to produce supporting documents to address the discrepancies before making a new decision.

7. The appeal was allowed by way of remand, providing an opportunity for the appellant to present evidence and clarifications, leading to a de novo decision by the Adjudicating Authority in light of the previous Tribunal decisions on similar matters.