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2014 (6) TMI 356 - AT - Service TaxDemand of service tax - suo moto credit - Amount charged for arranging visa for their clients - Business Auxiliary Service - cancellation of tickets - Held that - activity is not covered by any of the clauses of the definition of Business Auxiliary Service as given in Section 65 (19) of the Finance Act, 1994, therefore, we hold that this activity is not taxable under Business Auxiliary Service during the period of dispute and, hence, the demand of service tax on this amount is not sustainable. Cancellation charges are collected from the persons booking the air ticket and this is not the amount received from the appellant s client the airlines. It is not disputed that in respect of cancelled tickets, the airlines do not give any commission whatsoever to the appellant. In view of this, we hold that no service tax would be payable under Section 65 (105) (l) of the Finance Act, 1994 on the cancellation charges which are a part of the airfare received by the appellant from the persons booking the air ticket who, subsequently, had cancelled the same. Moreover in any case, in terms of exemption Notification No. 22/97-ST dated 26/06/97 the amount received by the air travel agent, which is in excess of the commission received by him from the airline for the booking of passage for travel by air, was exempt from service tax and in terms of this exemption notification no service tax would be leviable on the cancellation charges. - Decided in favour of assessee. As regards, the suo moto credit of service tax paid in respect of cancellation of tickets, we find that this issue stands decided in favour of the appellant by the judgment of Hon ble Punjab & Haryana High Court in the case of CCE & ST, Jalandhar vs. Janta Travels (P) Ltd. (2008 (8) TMI 187 - PUNJAB AND HARYANA HIGH COURT) and, hence, the impugned order on this issue is not sustainable. - Decided in favour of assessee.
Issues:
1. Adjustment of service tax on cancelled air tickets. 2. Taxability of charges for arranging visas under Business Auxiliary Service. 3. Service tax on cancellation charges retained by the air travel agent. Analysis: 1. Adjustment of Service Tax on Cancelled Air Tickets: The appellant, an air travel agent, opted to discharge service tax liability under Rule 6(7) of the Service Tax Rules during the period of dispute. The first issue was whether service tax paid and collected from clients could be adjusted for payment when air tickets were cancelled, and no commission was received. The appellant argued for suo moto adjustment citing a Punjab & Haryana High Court judgment allowing such adjustments due to no unjust enrichment. The tribunal agreed with the appellant, holding that adjustment was permissible in such cases, and the impugned order was not sustainable. 2. Taxability of Charges for Arranging Visas: The second issue revolved around whether charges for arranging visas for clients were taxable under Business Auxiliary Service. The appellant contended that this activity did not fall under any clause of the definition of Business Auxiliary Service under Section 65(19) of the Finance Act, 1994. The tribunal concurred, ruling that the activity was not taxable under Business Auxiliary Service during the dispute period, leading to the demand for service tax on this amount being deemed unsustainable. 3. Service Tax on Cancellation Charges: The final issue was the service tax liability on cancellation charges retained by the air travel agent. The appellant argued that since no commission was received from airlines for cancelled tickets, no service tax should be charged on these charges. Additionally, the appellant highlighted an exemption notification stating that amounts exceeding the commission received were exempt from service tax. The tribunal agreed with the appellant, holding that no service tax was payable on cancellation charges, and the impugned order was set aside, allowing the appeal. In conclusion, the tribunal ruled in favor of the appellant on all three points of dispute, allowing the appeal and setting aside the impugned order.
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