2018 (1) TMI 1018 - AT - Service Tax

Whether the appellant s request for re-quantification of tax demand in respect of Air Travel Agents Services , in terms of Rule 6(7) of the Service Tax Rules, 1994, is required to be accepted or not? Held that - The basic requirement is that once exercised, the same is to be applied uniformily in respect of all the transactions in a particular Financial Year. The appellant in the present case are seeking to exercise the said option, to be applied equally and uniformily in respect of the entire transaction. In as much as, they were not paying any Service Tax, the question of exercising the said option did not arise during the relevant period and the appellant s request for exercising the said option at this point of time, when the tax is being confirmed against them, is proper and justified. The matter needs remand for re-quantification of the assessee s tax liability by extending them the benefit of Rule 6(7) of the Service Tax Rules, 1994 - appeal allowed by way of remand.

Summary

Issues:
1. Request for adjournment denied
2. Appellant's liability for Service Tax on various services
3. Contention regarding computation of Service Tax under Rule 6(7) of Service Tax Rules, 1994

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved the denial of a request for adjournment, leading to the decision on the appeal itself. The appellant, registered under "Air Travel Agents Services," was found to be providing additional services such as Hotel Ticketing, Tour Operators, Visa Relating Works & Rail Ticketing, receiving commission from various sources. The Revenue sought to confirm Service Tax on the entire commission received. The Original Adjudicating Authority confirmed a demand of &8377; 24,73,729, of which the appellant had already paid &8377; 9,92,473 along with interest. Penalties were imposed under various sections. The appellant did not contest the liability to pay Service Tax but contended that the tax liability should be computed under Rule 6(7) of the Service Tax Rules, 1994. However, the Commissioner (Appeals) rejected this contention as the appellant had not exercised the option for computation under the said Rule.

The main issue to be decided was whether the appellant's request for re-quantification of tax demand in respect of "Air Travel Agents Services" under Rule 6(7) of the Service Tax Rules, 1994, should be accepted. The Tribunal noted that the said Rule does not mandate the option to be exercised in writing but uniformly applied once chosen for all transactions in a Financial Year. As the appellant had not paid any Service Tax during the relevant period, the option was not exercised then. The Tribunal found the appellant's request to exercise the option at this stage, when tax liability was confirmed, justified. Thus, the matter was remanded for re-quantification of the tax liability by extending the benefit of Rule 6(7) to the appellant. The penalty issue was left open for the appellant to contest before the Original Adjudicating Authority.

In conclusion, the appeal was allowed by way of remand, emphasizing the importance of correctly applying the provisions of the Service Tax Rules, 1994, in determining the appellant's tax liability for the various services provided.