2024-VIL-770-CESTAT-MUM-ST
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SERVICE TAX CESTAT Cases

Service Tax – Section 65(4), 65(19) and 65(105) of Finance Act, 1994 – Booking of tickets – Receipt of commission – Tax liability – Appellants are engaged in providing taxable service under category of Air Travel Agent defined under Section 65(4) of the Act – Consequent to investigation, department issued show cause notices to Appellants proposing demand of Services Tax on various charges collected by Appellants – Adjudicating authority confirmed demands proposed in show cause notice – Whether Global Distribution System (GDS) commission, incentive, cancellation charges etc. received by Appellants is subject to service tax under category of Business Auxiliary Services or not – HELD – Section 65(19) of the Act defines Business Auxiliary Service (BAS) means any service in relation to promotion or marketing or sale of goods belonging to client – In order to fall under purview of BAS, there must be involvement of three parties, namely, service provider, service receiver and agent facilitating procurement of service for and on behalf of service provider – For booking of ticket, passenger only approached Appellants and not GDS companies – Verifying the economic aspect, Appellants approaches a particular GDS for booking of tickets – In absence of any connection between GDS, Appellants and its customers, activities cannot be considered as a service exigible to service tax under taxable category of BAS – GDS commission/incentive is paid to Appellants, if they are able to attain an agreed level of segments to be booked – Commission, incentives, cancellation charges etc. received by Appellants cannot be subjected to levy of service tax under BAS – Appeal allowed - Cancellation of air tickets – Collection of charges – Demand of tax – Whether Appellants are liable to pay service tax on amount collected/retained/received by Appellants as Over Riding Commission (ORC)/Retaining Refund Administrative Fees (RAF) – HELD – Appellants render services of Air Travel Agent by booking of passage for travel by air for clients/customers – Appellants were charging ORC in lieu of their overheads or cost of booking tickets from their clients and they are also charging & recovering RAF from their clients against cancellation of air tickets – On said ORC/RAF amount, impugned show cause notices had proposed for demand of service tax under head BAS – Neither show cause notices nor impugned order have specified under which clause of definition of BAS, said activity of Appellants would be covered – Appellants render services of Air Travel Agent by booking of passage for travel by air for customers and not provided any Business Auxiliary Service to them – Disputed charges which are recovered/retained by Appellants are not liable to Service tax under BAS – Impugned order in so far as it has confirmed adjudged demands on Appellants is set aside.
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