Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (7) TMI 11 - AT - Service TaxIssues Involved: 1. Classification of services under Business Auxiliary Services (BAS). 2. Taxability of incentives/commission received from Global Distribution System (GDS) companies. 3. Taxability of overriding commission/service charges and cancellation charges. 4. Taxability of amounts collected for visa/passport processing and emigration charges. 5. Taxability of margins earned from selling air tickets purchased from consolidators. 6. Alleged non-deposit of collected service tax to the government. 7. Invocation of extended period of limitation for issuing show cause notices. Issue-wise Detailed Analysis: 1. Classification of Services under Business Auxiliary Services (BAS): The primary issue was whether the GDS commission, incentives, and cancellation charges received by the appellants are subject to service tax under BAS. The tribunal found that the appellants, as air travel agents, were not promoting the business of CRS companies or airlines but were promoting their own business. This was supported by the definition of "air travel agent" under Section 65(4) and the taxable service under Section 65(105)(l). The tribunal held that the services provided by the appellants were confined to the booking of air tickets and did not fall under BAS. 2. Taxability of Incentives/Commission from GDS Companies: The tribunal referenced the Larger Bench decision in Kafila Hospitality & Travels Pvt. Ltd., which held that incentives/commissions paid to travel agents by airlines or CRS companies are not subject to service tax under BAS. The incentives were considered as part of the air travel agent's service and not as a separate service promoting the business of the airlines or CRS companies. 3. Taxability of Overriding Commission/Service Charges and Cancellation Charges: The tribunal found that the appellants were discharging service tax under Rule 6(7) at the specified rate on the basic fare, which covered all services connected with the booking of air tickets. Therefore, no further service tax could be demanded on overriding commission/service charges or cancellation charges. This was supported by previous judgments such as Global Forex and Travels Ltd. and British Airways PTC India Branch. 4. Taxability of Amounts Collected for Visa/Passport Processing and Emigration Charges: The tribunal referred to the CBEC Circular No. 137/6/2011-ST, which clarified that assistance for visa processing does not fall under any taxable services defined in Section 65(105). The tribunal found that the adjudicating authority had wrongly interpreted the circular and confirmed the demand without specifying the category of service. The tribunal held that the demand for service tax on such amounts was not sustainable. 5. Taxability of Margins Earned from Selling Air Tickets Purchased from Consolidators: The tribunal held that the margins earned from selling tickets purchased from consolidators at a higher price were not taxable. This was supported by the judgment in Commissioner of Service Tax, Ahmedabad Vs. Om Air Travels Pvt. Ltd., which considered such margins as trade margins and not subject to service tax. Additionally, service tax was already paid by the consolidators under Rule 6(7), and thus, no further tax could be levied on the appellants. 6. Alleged Non-Deposit of Collected Service Tax to the Government: The tribunal found that the appellants had collected service tax from their customers and deposited the same with the government. The department's presumption that the appellants had not deposited the collected tax was found to be baseless and without evidence. The tribunal held that the provisions of Section 73A(2) and (3) could not be invoked as the appellants had already paid the service tax collected from customers. 7. Invocation of Extended Period of Limitation for Issuing Show Cause Notices: The tribunal held that the extended period of limitation could not be invoked as there was no suppression of facts or intent to evade tax. The appellants had disclosed all relevant amounts in their books of accounts and annual reports. The tribunal also noted that a subsequent show cause notice could not invoke the extended period if an earlier notice had already been issued for a similar period. This was supported by the decision in Nizam Sugar Factory v. CCE. Conclusion: The tribunal set aside the impugned order and allowed the appeal in favor of the appellants, providing consequential relief as per law. The tribunal found no merit in the department's demands and confirmed that the appellants had discharged their service tax liability correctly.
|