2019 (6) TMI 1022 - AT - Service Tax

Business Auxiliary Services - discount received from main IATA agent by the appellant as a sub-agent - taxability - HELD THAT - The Ld. Commissioner (Appeals) while dropping the demand held that purchasing a ticket on discounted price and selling them to customer is a trading activity hence the trade margin will not be taxable. In the fact that the appellant is purchasing the ticket on discounted price and selling the same at higher price to the customer, the difference, in our view, is a trade margin during the process of sale and purchase of the tickets. The demand raised on trade margin of purchase and sale of the tickets shall not be taxable - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
Whether the discount received from the main IATA agent by the appellant as a sub-agent is liable to be taxed under Business Auxiliary Service.

Analysis:
The Appellate Tribunal CESTAT Ahmedabad, comprising Mr. Ramesh Nair, Member (Judicial), and Mr. Raju, Member (Technical), addressed the issue of taxation on the discount received by the appellant as a sub-agent from the main IATA agent. The Revenue, represented by Sh. S.N. Gohil, argued for taxation, while Sh. P.P. Jadeja, representing the Respondent, contended that the trade margin resulting from purchasing tickets at a discount and selling them at a higher price to customers should not be taxable. The Respondent asserted that the appellant's services fall under the category of air travel agent services, citing a precedent in the case of CCE Goa vs Zauri Travel Corporation.

Upon reviewing the arguments and records, the Tribunal noted that the Ld. Commissioner (Appeals) had ruled in favor of the Respondent, stating that the trade margin arising from purchasing tickets at a discount and selling them at a higher price is not taxable as it constitutes a trading activity. The Tribunal agreed with this reasoning, emphasizing that the difference in price during the sale and purchase process represents a trade margin. Consequently, the demand raised on the trade margin of ticket purchase and sale was deemed non-taxable. The Tribunal upheld the impugned order, dismissing the Revenue's appeal.

In conclusion, the Tribunal's decision clarified that the discount received by the appellant as a sub-agent from the main IATA agent, when utilized in the process of selling tickets at a higher price to customers, does not attract taxation under Business Auxiliary Service. The judgment reaffirmed the classification of the appellant's services as air travel agent services and established the trade margin resulting from ticket transactions as non-taxable, in line with the precedent cited during the proceedings.