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Amar Travels India V/S Commissioner of Service Tax, Delhi

    Final Order No. ST/A/56421/2017-CU(DB) in Appeal No. ST/58209/2013

    Decided On, 05 September 2017

    At, Customs Excise Service Tax Appellate Tribunal Principal Bench New Delhi

    By, THE HONORABLE JUSTICE: DR. SATISH CHANDRA
    By, (PRESIDENT) AND THE HONORABLE JUSTICE: V. PADMANABHAN
    By, MEMBER

    For Petitioner: A.K. Batra and Vibha Narang, Advocates And For Respondents: Amresh Jain, DR



Judgment Text


1. The appeal is filed against the Orders-in-Appeal No. 90/2013, dated 21-3-2013. The appellant is a proprietorship firm which is engaged in rendering services of International Air Ticket Booking to its customers and is registered with the Department under the category of Air Travel Agents Services. For efficient conduct of business, the appellant is using Central Reservation Systems (CRS) software of M/s. Amadeus India Pvt. Ltd. By using such software, the appellant arranges international air ticket booking for customers. The appellant is receiving commission from M/s. Amadeus India Pvt. Ltd. Revenue is of the view that such commission received is chargeable to Service Tax under the category of Business Auxiliary services as the appellant is promoting the business of M/s. Amadeus India Pvt. Ltd. The appellant is also receiving commission from International Air Tickets Association (IATA) on booking of tickets for their clients. While selling air tickets to clients as agents of IATA, the commission upon sale of air tickets is shared by the principal IATA agent with the appellant. Revenue was of the view that such sharing of commission amount between the principal agent and the appellant is for providing marketing support for selling the air tickets, and as such, is liable to service tax under the category of Business Auxiliary service. Therefore, show cause notice was issued to the appellant and demand of service tax amounting to Rs. 33,96,623/- was confirmed on the appellant along with interest and penalties under various sections of Finance Act, 1994. Aggrieved by the impugned order, the present appeal has been filed.

2. With this background, we have heard Shri A.K. Batra, with M/s. Vibha Narang, learned Advocate for the appellant and Shri Amresh Jain, learned DR for the Department.

3. The main grounds of appeal are :

(a)(i) Appellant is using the CRS provided by M/s. Amadeus for the provision of own services of Air Travel Agent. This is SELF USE and not providing any services in nature of 'Business Auxiliary Services' to M/s. Amadeus;

(ii) Appellant never informs the clients, who intends to purchase the tickets that they are using the software/products of M/s. Amadeus for booking their tickets;

(iii) M/s. Amadeus provides Global Distribution software along with hardware for enabling connectivity to the CRS hosts. The above facilities are provided free of costs to the appellant and other Air travel agents;

(iv) However, the relationship of the appellant with M/s. Amadeus is of a client who purchases the products of the company; as such there can be no promotional activity either directly or indirectly by the client. No promotional activity under "Business Auxiliary Services" gets attracted in the absence of three parties;

(v) The incentives so received did not amount to any kind of commission for alleged promotional activity, but was an incentive/rewards provided by M/s. Amadeus for usage of their software so as to persuade the users to increase its usage in the provision ticketing services.

(b) On payment of service tax on commission received from other LATA agents, they submitted :

(i) At the outset, the sale and purchase of tickets are done on principal to principal basis; the tickets are sold by appellant under its own invoices;

(ii) On purchasing the tickets from IATA Agents, the risk/reward associated with the tickets are also transferred;

(iii) There is no agency relationship between the IATA agents among themselves;

(iv) The word "commission" used is a misnomer. It is a discount shared among the agents upon the purchase of air tickets upon the last price.

(v) Moreover, service tax on the full basis fare is already paid hence, non-payment of tax on the discount portion is unsustainable

(vi) Revenue neutral situation.

4. Learned Counsel for the appellant reiterated the grounds and relied on various case laws to support the above arguments.

5. Learned DR supported the impugned order.

6. First, we examine the issue of payment of service tax on the commission received from M/s. Amadeus India Pvt. Ltd. We find that the issue regarding levy of service tax on the commission received from M/s. Amadeus for use of CRS has already been decided by this Tribunal in the case of D. Pauls Consumer Benefit Ltd. v. CCE, New Delhi [Final Order No. 50861/2017, dated 15-2-2017 [2017-VIL-165-CESTAT-DEL-ST : 2017 (52) S.T.R. 429 (Tri.-Del.)] against the appellant.

7. By following the above decision of the Tribunal, we uphold the demand of service tax under the category of Business Auxiliary services in respect of commission received from M/s. Amadeus.

8. Next we turn to the issue of commission received from other IATA agents.

9. The submission of the appellant is that they are purchasing the tickets from IATA agents on principal to principal basis and therefore, the commission received falls under the category of Business Auxiliary services. It has further been submitted that the Travel agent who sold the tickets has already paid the service tax under the category of air travel agents. The services rendered by the appellant, as sub-agent of IATA agent is also falling under air travel agency services. Since the commission has already suffered service tax in the hands of principal IATA agent, it has been argued by the appellant that no service tax is liable to be paid.

10. Revenue has sought to levy the service tax on the commission received by the appellant from the principal IATA agent under the category of Business Auxiliary services. In the case of Airlines Agents Association v. Union of India [2003-TIOL-143-HC-MAD-ST : 2006 (3) S.T.R. 3 (Mad.)], the question arose as to whether the services rendered by IATA agent is service rendered to the airlines or service rendered to the customers. The Hon'ble Madras High Court concluded that the services rendered by the IATA agent is one, that is rendered to the customers, even though the measure of such service tax is the commission received by the agent from the airlines.

In the present facts of the case, the appellant rendered the service to the customers, as air travel agent and received the commission from principal IATA agent, who also renders the same service i.e. air travel agent services. In view of the above, we are led to the conclusion that the services rendered by sub-agent is also the same and it cannot be different from that of air travel agent services. The Tribunal has also taken a similar view in the case of Commissioner v. Zuari Travel Corporation [2013-TIOL-2301-CESTAT-Mum].

In the impugned order, the view taken by Revenue is that such commissi

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on received from other IATA agent will be leviable for service tax under the category of Business Auxiliary services. In view of the decision of Hon'ble Madras High Court (supra) and other decisions, we conclude that such commission received by the appellant is in relation to the services of air travel agent. Hence, the demand of service tax under the category of Business Auxiliary services, cannot be sustained and same is set aside. 11. In view of the above discussions, we uphold the demand of service tax under the Business Auxiliary Services in respect of commission received from M/s. Amadeus India Pvt. Ltd. However, we set aside the demand of service tax on commission received from other IATA agents. In the result, appeal is partly allowed.
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