2023 (6) TMI 994 - AT - Service Tax

Levy of Service Tax - Overriding Commission - incentive for achieving targeted business to booking Air Ticket for their customers - HELD THAT - The issue of Overriding Commission has already been decided by the Larger Bench of this Tribunal in the case of KAFILA HOSPITALITY TRAVELS PVT. LTD. VERSUS COMMISSIONER, SERVICE TAX, DELHI 2021 (3) TMI 773 - CESTAT NEW DELHI where it was held that incentives paid for achieving targets cannot termed as consideration and, therefore, are not leviable to service tax under Section 67 of the Finance Act. The matter has already been decided in the favour of the appellant on merit - Appeal allowed.

Summary

Issues involved: Determination of tax liability on "Overriding Commission" received by the appellant from various airlines under the category of business auxiliary service.

Summary:
1. The appellant, engaged in providing travel agent services, received "Overriding Commission" from airlines as an incentive for achieving targeted business in booking air tickets for customers. The department contended that this commission falls under the category of business auxiliary service, leading to the issuance of show cause notices for tax liability.

2. The department issued two show cause notices, which were confirmed by the Adjudicating Authority. The Commissioner (Appeals) upheld the tax liability on the "Overriding Commission" received by the appellant. The appellant challenged this decision before the Appellate Tribunal.

3. The Tribunal referred to a previous decision by the Larger Bench regarding the taxation of incentives. It was established that incentives paid for achieving targets cannot be considered as "consideration" under Section 67 of the Finance Act, and therefore, are not liable to service tax. Relying on this precedent, the Tribunal allowed the appeals in favor of the appellant.

4. The Tribunal concluded that incentives paid for achieving targets do not qualify as "consideration" for service tax purposes. Therefore, the "Overriding Commission" received by the appellant from airlines is not taxable under the business auxiliary service category. The appeals were allowed in favor of the appellant.

5. The Tribunal's decision was pronounced in the open court on 14.06.2023, resolving the issue of tax liability on the "Overriding Commission" received by the appellant from various airlines.