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TMI Blog2024 (7) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... the same CRS service providers for booking of air tickets. The CRS is computerized system used to store and retrieve information and conduct transaction related to Air Travel. Major CRS operators that book and sell tickets for multiple Airlines are known as Global Distribution Systems (GDS). On perusal of the statutory provisions vis- -vis the activities undertaken by the appellants, the appellants is not an agent, working on behalf of the customers for facilitating purchase of tickets from the CRS. The customers approaching the appellants for booking of tickets are not aware about the particular CRS, who issues the ticket through the appellants. In order to fall under the purview of BAS, there must be involvement of three parties namely, the service provider, service receiver and the agent facilitating procurement of service for and on behalf of the service provider - A passenger is not aware of the CRS Company being utilized by the travel agent for booking the segment nor can a passenger influence appellants /travel agent to avail the services of a particular CRS Company. The passenger cannot directly use the CRS software provided by the Company to book an airline ticket. It can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Air Travel Agent by booking of passage for travel by air for the clients/ customers. If the Airlines do not provide any commission to them, they recover the cancellation charges/booking overhead charges/ cost of booking tickets in the name of ORC/RAF from their customers - It is not disputed that in respect of cancelled tickets, the airlines/CRS do not give any commission whatsoever to the appellants. In view of this, no service tax would be payable under Section 65(105)(l) ibid on the said charges, which are a part of the airfare received by the appellants from the persons booking the air ticket(s); who, subsequently, had cancelled the same. Therefore, this activity is not taxable under BAS during the period of dispute and thus, the said disputed charges which are recovered/ retained by the appellants are not liable to Service tax under BAS. Levy of service tax - Air Ticket purchased by the appellants from Airline consolidators and sold to customers at higher price - HELD THAT:- The appellants are purchasing ticket from Consolidator/General Sale Agents/other agents on discounted price and thereafter, they are selling at a higher price to the customers. The trade margin earned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T:- The Department had alleged that the fact of receipt of said amount/charges was not disclosed in any manner. To this effect, we find that all the disputed amounts/charges received by them are duly accounted for in their books of accounts and also disclosed in Annual Report viz. Profit and loss account and the Balance Sheet, which is a public document and also known to the Department. Having disclosed the receipts of said disputed amount in the Annual Report coupled with the bona fide belief of the appellants, we find that there is no suppression of facts in the instant case with an intention to evade payment of Service tax. Hence, we hold that the proviso to section 73(1) ibid i.e., extended period of time cannot be invoked in this case and the demand of service tax is hit by limitation of time. There are no merits in the impugned order, in so far as it has confirmed the adjudged demands on the appellants. Therefore, the impugned order is set aside - appeal allowed. - MR. S.K. MOHANTY, MEMBER (JUDICIAL) AND MR. M.M. PARTHIBAN, MEMBER (TECHNICAL) Shri J.C. Patel, Advocate for the Appellants Shri A.K. Shrivastava, Authorized Representative for the Respondent ORDER Briefly stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pearing for the appellants submitted that the appellants as an Air Travel Agent had discharged the service tax liability in terms of the option provided under Rule 6(7) of the Service tax Rules, 1944 at the specified rate of the Basic Fare, and thus, any further demand for service tax on commission, incentives, cancellation charges etc. received by the appellants by treating the same as Business Auxiliary Service, is unsustainable in law. The taxable service provided by an Air Travel Agent is defined in Section 65(105) (l) ibid, as any service provided to any person by an Air Travel Agent in relation to the booking of passage for travel by air. The use of the words any service connected with , to any person and in relation to gives very wide scope to the taxable service provided by the air travel agent and accordingly, any service which is connected with or is in relation to booking of air ticket and is provided to any person is covered under air travel agent service. The scope of Air travel agent service is not restricted to mere booking of air tickets, but is expanded to cover any service in connection with booking of air tickets. Under Rule 6(7) ibid, air travel agent has been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCE - 2015 (37) STR 513 (Tri. - Del.) and British Airways PTC India Branch Vs. CST -2018 (10) GSTL 561. 2.4 He further submitted that Service tax was not payable under BAS, on amount charged for arranging Visa and on statutory fees such as, Trade Test fees and Medical test fees paid to Consulates on behalf of customers, to whom the appellants assisted in completing Visa formalities, passport formalities and emigration formalities and merely claimed such amount by way of reimbursement. He placed reliance on the decisions of the Tribunal in Modiline Travel Services P. Ltd (supra) and Globe Forex and Travels Ltd. (supra). 2.5 He further submitted that where Air travel agent purchase tickets from a Consolidator/General Sales Agent/ another Agent at discounted price and sells the same at a higher price, the margin earned is not liable to Service tax inasmuch as the statutory liabilities on provision of various facilities have already been discharged. To support his stand, the learned Advocate has relied on the judgment of Tribunal in the case of CST Vs. Om Air Travels P. Ltd., reported in 2019 (25) GSTL 460. 2.6 Learned Advocate also submitted that in cases of purchase of tickets from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is absolutely no mention in the SCNs of the figures of alleged incentives received from Airlines nor any evidence of receipt of incentives from Airlines and the amount of service tax included therein. There is no evidence to match the alleged Service tax included in the Incentives received from Airlines with the Service tax deposited by the appellants with the Government so as to warrant the conclusion that what was deposited with the Government was service tax collected from Airlines and not the service tax collected from the customers. The SCNs have merely proceeded on the basis that as per the agreement with one airline viz. Jet Airways, the incentive was inclusive of service tax. Firstly, there is no mention in the SCNs of the figures of incentive received by the appellants from Jet airways and to match the alleged service tax included therein with the service tax deposited by the appellants with the Government. In fact, when the Incentive paid by the said Airlines is alleged to be inclusive of Service tax, it could only mean service tax, if any, leviable in law. As is evident from the judgments referred to above, no service tax was leviable on incentives received from A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed Representative (AR) appearing for the Revenue, reiterated the findings recorded in the impugned order in support of confirmation of the adjudged demands on the appellants. 4. Heard both sides and examined the case records. 5.1 The first issue that arises for consideration is, whether the GDS Commission, incentive, cancellation charges etc., received by the appellants is subject to service tax under the category of Business Auxiliary Services or not. The contention of the Department is that the said amounts are leviable to service tax under the category of BAS. Section 65(19) ibid defines BAS as under :- 65(19) business auxiliary service means any service in relation to :- (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promoting or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; or (v) production or processing of goods for, on behalf of, the client; (vi) provisions of the services on behalf of client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooking of ticket, the passenger only approached the appellants and not the CRS. Verifying the economic aspect, the subagent, like the appellants approaches a particular CRS for booking of tickets. Thus, in absence of any connection between the CRS, the appellants and its customers, the activities cannot be considered as a service, exigible to service tax under the taxable category of BAS. Further, there is no difference between the nature of services provided by the CRS and the appellants inasmuch as both of them are confined to cater to the requirement of booking of tickets, for the benefit of both the airlines and the customers. It is seen that the CRS commission /incentive is paid to the appellants, if they are able to attain an agreed level of segments to be booked. A passenger is not aware of the CRS Company being utilized by the travel agent for booking the segment nor can a passenger influence appellants /travel agent to avail the services of a particular CRS Company. The passenger cannot directly use the CRS software provided by the Company to book an airline ticket. It cannot, therefore, be said that the appellants are promoting any activity for the passenger or they are p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etrieval [OIDAR] services, wherein they collate data such as ticket availability, price, duration of journey, etc., for access by subscribers. CRS Companies also enter into subscriber agreements with IATA agents wherein the IATA Agents are permitted to use the data base available on the portal for booking of airline tickets for passengers/sub-agents. Sub-agents can also purchase airline tickets from the IATA agents for their customers (passengers). The passengers are the ultimate recipient of air travel services. 3. IATA agents are persons who have been authorized to sell airline tickets directly from the airlines to passengers/sub-agents. For sale of tickets, the IATA agents receive commission from the airlines. In addition to the said commission received for booking of airline tickets, the airlines also incentivize IATA agents by paying target-based incentives, which are linked to guaranteed booking of a minimum number of airline tickets. In certain cases, subagents also book airline tickets through IATA agents. In a situation where a sub-agent achieves a pre-determined target of bookings through a particular IATA agent, the IATA agent pays an incentive to the sub-agent. 4. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, the classification of the service would fall under air travel agent services and not BAS. xx xx xx 80. It, therefore, clearly transpires from the aforesaid decisions that incentives paid for achieving targets cannot termed as consideration and, therefore, are not leviable to service tax under Section 67 of the Finance Act. xx xx xx 84. The inevitable conclusion, therefore, that follows from the above discussion is as follows :- (i) the air travel agent is promoting its own business and is not promoting the business of the airlines; (ii) the air travel agent is not promoting the business of the CRS Companies; (iii) in any view of the matter, the classification of the service would fall under air travel agent service and not BAS in terms of the provisions of Section 65A of the Finance Act; and (iv) the incentives paid for achieving the targets are not leviable to service tax. Following the above said decision, we are also of the considered opinion that the demand cannot be sustained in the present disputed matter. 9. Now we are addressing the second issue that arises for consideration is, whether the appellants are liable to pay service tax on collection of certain amounts from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand on such ground. It is well settled position of law that lack of clarity in the show cause notice/order and omission to indicate the specific category of service, under which the tax is proposed to be demanded will vitiate the proceedings ab initio. In such circumstances, the demand of service tax cannot survive. 10. As regard the demand of Service tax on amount collected/retained/received by the Appellants as ORC (Over Riding Commission)/ RAF (Retaining Refund Administrative Fees), we find that the learned adjudicating authority has dropped the demand on ORC/RAF upto the period 30.06.2012, following the decision of the Tribunal in case of Globe Farex Travels Ltd. (Supra). However, he did not apply the same principle on the demand proposed for recovery for the period 01.07.2012 to March 2016, owing to the reason that the ORC/RAF is not covered in exemption Notification No. 25/2012-ST dated 20.06.2012 or in the negative list of services prescribed in 66D ibid (came into effect from 01.07.2012). In this context, we notice that the appellants were charging ORC in lieu of their overheads or cost of booking tickets, from their clients. They are also charging recovering/ retaining R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax. We find that the appellants are purchasing ticket from Consolidator/General Sale Agents/other agents on discounted price and thereafter, they are selling at a higher price to the customers. The trade margin earned for such purpose is not taxable as held by the Tribunal in the case of Commissioner of Service tax, Ahmedabad Vs. Om Air Travels Pvt. Ltd (supra) as under : 4. Heard both the sides and perused the records. We find that the Ld. Commissioner (Appeals) while dropping the demand held that purchasing a ticket on discounted price and selling them to customer is a trading activity hence the trade margin will not be taxable. In the fact that the appellants is purchasing the ticket on discounted price and selling the same at higher price to the customer, the difference, in our view, is a trade margin during the process of sale and purchase of the tickets. Therefore, we do agree with the contention given by the Ld. Commissioner (Appeals). Accordingly, the demand raised on trade margin of purchase and sale of the tickets shall not be taxable. Hence the impugned order is upheld, Revenue s appeal is dismissed. 13. We also find that where air tickets were procured by appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forthwith pay the amount so collected to the credit of the Central Government. A correct reading of the provisions indicates that the amount representing service tax would necessarily mean the service Tax not paid. There is no provision to say that service tax which has already been paid should not be recovered from anyone. Such an understanding is contrary to the principles of indirect taxation. The provisions would apply only in cases where service tax is recovered, by the person liable to pay tax from their customers and is not paid to the Government. The incidence of an indirect tax is bound to be passed on. If the person liable to pay tax, having paid the tax liable, has an understanding/agreement with his customers to recover such tax from them. Then in such event, the provisions of the above Section cannot be invoked. In the present disputed matter, the appellants strongly argued that being an air travel agent, they had opted to pay Service tax on percentage of basic fare specified in sub-rule (7) of Rule 6 ibid. The explanation there under has clarified that basic fare means that part of the air fare on which commission is normally paid to the air travel agent by the airlin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not properly examined the documentary evidences and simply confirmed the Service tax demand on this account, which is legally not sustainable. 16. Learned Counsel for the appellants also contended that the extended period of limitation could not have been invoked in the facts and circumstances of the present case. The first show cause notice was issued on 22.04.2016 for the period October 2010 to September 2015 and second show cause notice was issued on 27.11.2018 for the period October 2015 to March 2016. The submissions advanced by the Learned Counsel for the appellants deserves to be accepted. The appellants had paid the Service tax on the part of basic fare and filed the ST-3 returns regularly. It is an admitted and undisputed fact that the appellants are registered service provider of Air Travel Agent service. It is also an admitted fact that they had filed returns for the relevant period. We find force in the argument of the appellants that they were in bona fide belief and understanding that the incentives/ commission/ cancellation charges/ amount charged for arranging visa etc. would not be subjected to payment of service tax under BAS. Hence, they had not reported the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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