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2018 (2) TMI 648 - AT - Service TaxBusiness Auxiliary Services - software of computer reservation system provided by Gallilieo - Held that - similar issue decided in the case of D. Pauls Consumer Benefit Ltd. Versus CCE, New Delhi 2017 (3) TMI 1019 - CESTAT NEW DELHI , where it was held that They are by using these GDS/CRS for booking tickets, receiving incentives from the said companies for every segment booked by them. Hence, the service provided by the assessee-Appellants has rightly been covered under the heading Business Auxiliary Service as defined u/s 65(19) of the FA, 1994 - the demand be restricted to normal period limitation and no penalty is imposable on the Appellants. Matter remanded to the adjudicating authority to compute the demand- appeal allowed by way of remand.
Issues:
- Whether the services provided by the Appellant to a company fall under the category of Business Auxiliary Service (BAS) and are liable for service tax. - Whether the commission/incentives received by the Appellant from Computer Reservation System (CRS) companies are chargeable to service tax under BAS. - Whether the demand for service tax with interest and penalty imposed on the Appellant is justified. - Whether the extended period of limitation can be invoked for non-payment of service tax by the Appellant. Analysis: 1. Issue 1: Services falling under Business Auxiliary Service (BAS) The Appellant, engaged in providing taxable services under BAS, promoted and marketed the CRS of a company. The Appellant received commission on successful transactions using the CRS. The demand for service tax was confirmed, leading to the appeal. The Appellant argued that the incentives received were rewards, not for services rendered, citing precedents. The Revenue contended that the issue was settled in previous cases. The Tribunal, referring to similar cases, held that the services provided by the Appellant fell under BAS, as clarified by a circular. The demand was restricted to the normal limitation period, and no penalty was imposed. 2. Issue 2: Chargeability of Commission/Incentives under BAS The Appellant received incentives from CRS companies for using their systems. The Appellant argued that these incentives were akin to rewards and not chargeable to service tax under BAS. The Revenue cited previous judgments to support the levy of service tax on such incentives. The Tribunal, following the principle laid down in previous cases, held that service tax was leviable on the amount received by the Appellants from CRS companies under BAS. However, due to uncertainty and confusion, the demand was restricted to the normal limitation period, and no penalty was imposed. 3. Issue 3: Justification of Demand with Interest and Penalty The Appellant contested the demand for service tax, interest, and penalty. The Tribunal found that the demand was justified under BAS, but due to the clarification issued by a circular, the demand was restricted to the normal limitation period. No penalty was imposed on the Appellants. 4. Issue 4: Invocation of Extended Period of Limitation The Appellant argued against the invocation of the extended period of limitation and penal provisions for non-payment of service tax. The Tribunal found that the demand was clarified by a circular, leading to the restriction of the demand to the normal limitation period. No penalty was imposed, and the matter was remanded to the adjudicating authority for computation. In conclusion, the Tribunal held that the services provided by the Appellant fell under BAS, and the commission/incentives received from CRS companies were chargeable to service tax. The demand was restricted to the normal limitation period, and no penalty was imposed on the Appellants. The matter was remanded for computation, and the appeals were disposed of accordingly.
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