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2018 (9) TMI 1662 - AT - Service TaxBusiness Auxiliary Service - Commission received by appellant from M/s. Galileo India Pvt. Ltd. for using the Galileo Centralized Reservation System (CRS) - Commission received by appellant for promoting business of Western Union Money Transfer Services in India. Commissions or incentives received for use of Centralized Reservation System - Held that - There are a number of decisions which have held that the said activity is definitely in the nature of Business Auxiliary Service and consequently, the commissions/incentives received thereon are exigible to service tax liability under that category - reliance placed in the case of New Royal Link Travels and Ors. Vs. CST, Chennai 2018 (3) TMI 115 - CESTAT CHENNAI - demand upheld. Money Transfer Services - Held that - Tribunal in Muthoot Fincorp. Ltd. Vs. Commissioner of C. Ex., Visakhapatnam 2009 (8) TMI 236 - CESTAT, BANGALORE , where it was held that the benefits of service are accrued to a person outside India and hence, they are not liable to service tax under Business Auxiliary Services - demand set aside. Penalty - Held that - Both the disputed issues had been mired in litigation and hence, there cannot be any penalty imposable in such situations - Demand set aside. Appeal allowed in part.
Issues:
1. Alleged commission received for using Galileo Centralized Reservation System (CRS) - Whether it falls under Business Auxiliary Service and is liable for service tax. 2. Commission received for promoting Western Union Money Transfer Services - Whether it is liable for service tax and penalty. Analysis: Issue 1: Alleged commission received for using Galileo CRS The Department claimed that the commission received for using the Galileo CRS falls under Business Auxiliary Service, leading to a demand for service tax. The Original Authority and Commissioner (Appeals) upheld this view. The Tribunal referred to previous decisions, including the case of New Royal Link Travels and Ors. Vs. CST, Chennai, and held that such commissions are indeed liable for service tax under Business Auxiliary Service. The demand for service tax of &8377; 2,34,683/- with interest was deemed legally correct and justified, and the Tribunal confirmed this part of the impugned order. Issue 2: Commission received for promoting Western Union Money Transfer Services Regarding the commission received for promoting Western Union Money Transfer Services, the Tribunal considered the case law of Muthoot Fincorp. Ltd. Vs. Commissioner of C. Ex., Visakhapatnam, which held that benefits accruing to a person outside India are not liable for service tax under Business Auxiliary Services. Additionally, the Tribunal cited the decision in Western Union Financial Services Inc. Vs. C.S.T., Delhi, where it was held that the activity involved the export of services. Consequently, the commission received for activities related to Western Union Money Transfer Services was treated as "Export of Services," and the service tax liability of &8377; 2,60,270/- with interest was dismissed. Penalty Regarding the penalty, the Tribunal noted that both disputed issues were subject to litigation, and thus, no penalty could be imposed in such circumstances. Despite upholding the demand related to Galileo CRS, the Tribunal ruled that no penalty should be levied. The appeal was partly allowed and partly dismissed based on the above terms. This judgment clarifies the tax liability concerning commissions received for using specific services and highlights the distinction between taxable and non-taxable activities under the service tax regime.
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