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TMI Blog2019 (1) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign airlines for passenger and / or cargo. Pursuant to enquiries conducted by the department, it appeared that in the said services appellant received Overriding Commission (ORC) in Indian currency. Department took the view that these ORC amounts are liable to service tax under the category of Business Auxiliary Service (BAS) under section 65 (19) of the Finance Act, 1994. Proceedings were initiated against the appellant vide SCN dt. 24.08.2006 inter alia, proposing demand of service tax of ₹ 46,90,610/- with interest thereon as also imposition of penalty. In adjudication, original authority vide an order dt. 28.12.2006 held that appellants were not consciously aware of the service tax liability from 1.3.2003 to 09.09.2004, hence extended period cannot be invoked in this case as there was no suppression, fraud or intention to evade tax. Based on these findings, the adjudicating authority dropped the proposals in the SCN. Appellants however preferred appeal against the conclusions of the original authority that ORC amounts that was taxable under BAS. Vide the impugned order dt. 104/2012 dt. 25.09.2012, Commissioner (Appeals) following the decisions of ETA Travel Agency P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o encourage traffic on Saudia s Airlines. Evidently, these activities performed by the appellants are contracted to have beneficial impact on air transportation traffic on Saudi Airlines. Although the appellants have been contracted as Saudia s GSA for the territory of Tamil Nadu, Andhra Pradesh, Karnataka and Kerala, appellant as a GSA is authorized to make sales over the services of Saudia and any other carrier with whom Saudia has interline traffic agreements. Soliciting and promoting of passenger air transportation is permitted to be done by the appellant on all lines awarded out by Saudia. Similarly, in the General Sales Agreement for Cargo entered into between the Saudi Arabian Airlines Corporation, Jeddah Office and the appellant, like air passenger transportation, the appellant in the GSA Agreement for cargo is similarly required to provide commercial services to Saudia including soliciting, promoting and selling cargo and mailing transportation for Saudia and assisting in all operations to encourage traffic agreement of Saudia's lines. Evidently, the commercial services provided by the appellant, inter alia, soliciting, promoting and selling passenger air transportatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned the amounts in terms of Indian rupee and such amounts were credited to the appellant s bank account. The Tribunal held that no part of the overriding commission (ORC) was received by way of inward remittance in convertible foreign exchange. Hence ORC received cannot be considered as receipts of convertible foreign exchange. Ld. AR for Revenue has pointed out that this decision was followed by the Tribunal in the case of Translanka Air Travel Pvt. Ltd. v. CST, Chennai - 2007 (7) S.T.R. 476 (Tri.-Chennai). While this may be so, however, the appellants have argued that ETA Travels decision has been stayed by the Hon ble High Court of Madras in C.M.A. No. 2359/2007 vide order dated 26-10-2007. It has been confirmed by Revenue that the matter has still not been decided by Hon ble High Court. We also note that the very same High Court of Madras, which is the jurisdictional High Court for this Tribunal, in a recent judgment in the case of Suprasesh General Insurance Services Brokers (P) Ltd. - [2015] 62 taxmann.com 364 (Madras) = 2016 (41) S.T.R. 34 (Mad.) has addressed the very same controversy. The facts in Suprasesh are that appellant therein did not pay service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xchange, such Indian rupees was obtained in lieu of foreign exchange the same will be deemed to be convertible exchange. The Tribunal s decision also took note of Foreign Exchange Management Act provision that if payment in Indian rupees is received through banking channel it s deemed to be convertible foreign exchange. 11. We are informed that CESTAT, Delhi in the case of Bird Travels (P) Ltd. v. CCE, Delhi - 2016 (45) S.T.R. 143 (Tri.-Del.), inter alia, placing reliance on decision in ETA Travels (supra) has taken a contrary view. However, by the principle of stare decisis this Tribunal is enjoined to follow the law laid down by the jurisdictional High Court of Madras in the case of Suprasesh General Insurance Services cited (supra). We are aware that the Suprasesh judgment has been appealed against by the department and the Hon ble Apex Court after condoning the delay has issued notice, as reported in 2016 (43) S.T.R. J22 (S.C.), however as no stay of the Suprasesh judgment has been ordered by the Hon ble Apex Court, we intend to follow the ratio thereof as laid down by the High Court of Madras. 12. No doubt, the proviso in Rule 3(3) of Export of Services Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X
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