Custom, Excise & Service Tax Tribunal
International Travel House Limited vs Secunderabad - G S T on 17 October, 2023
(1)
ST/30240 & 30241/2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench
Court - I
Service Tax Appeal No. 30240 of 2016
(Arising out of OIA No.HYD-SVTAX-000-APP-0202-15-16-ST dt.18.12.2015 passed by
Commissioner of Service Tax (Appeals), Hyderabad)
International Travel House Ltd
ITC Bhadrachalam House No. 106, SP Road, ......Appellant
Secunderabad, Telangana - 500 003
VERSUS
Commissioner of Central Tax
Secunderabad - GST
LB Stadium Road, Basheerbagh,
......Respondent
Hyderabad, Telangana - 500 004 and Service Tax Appeal No. 30241 of 2016 (Arising out of OIA No.HYD-SVTAX-000-APP-0201-15-16-ST dt.18.12.2015 passed by Commissioner of Service Tax (Appeals), Hyderabad) International Travel House Ltd ITC Bhadrachalam House No. 106, SP Road, ......Appellant Secunderabad, Telangana - 500 003 VERSUS Commissioner of Central Tax Secunderabad - GST LB Stadium Road, Basheerbagh, ......Respondent Hyderabad, Telangana - 500 004 Appearance Ms Madhumita Singh, Advocate for the Appellant. Shri A. Rangadham, AR for the Respondent.
Coram:
HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) FINAL ORDER No. A/30344-30345/2023 Date of Hearing: 17.10.2023 Date of Decision: 17.10.2023 [Order per: ANIL CHOUDHARY] Heard the parties.
2. The issue involved in these Appeals is that the Appellant is a provider of taxable services under "Travel Agent services", "Tour Operator services" and is also registered for some other services. The Appellant is registered with the (2) ST/30240 & 30241/2016 department and is regularly paying the admitted taxes as well as filing of prescribed returns. The Appellant had erroneously deposited service tax on Productivity Linked Bonus (PLB) and Deposit Incentive (DI). Subsequently, on being so advised that the said receipts are not towards provision of any services and hence, not taxable, the Appellant filed claim for refund for the period December 2012 to March 2013 for Rs.1,30,401/- and for the period April 2013 to September 2013 for Rs.10,49,246/-. Pursuant to SCN, the refund claims were rejected vide separate OIOs of even date being 24.05.2014. Being aggrieved, the Appellants have preferred Appeals before the learned Commissioner (Appeals), who, vide common OIA dated 18.12.2015, was pleased to reject the Appeals observing that the activity in question is not listed in Sec 66D (Negative List of services) and no independent exemption is notified for the said activity, during the material period and accordingly, held that the same are taxable services for the period under dispute. Further observed that Airline incentive has been held to be taxable for the period July 2003 to March 2007, in the case of DHL Logistics Pvt Ltd vs CCE, Thane-II [2015 (38) STR 620 (Tri-Mum)].
3. Being aggrieved, the Appellant is before this Tribunal.
4. Learned Counsel for the Appellant has explained that Productivity Linked Bonus (PLB) is a performance/target based incentive, which is received by the Appellant from the Airlines and is in the nature of bonus amount, which is awarded to Appellant or similarly situated travel agents, whenever any of them achieves the sales target of selling a particular volume of tickets within a specified period, on net flown revenue. Both the target for sale of tickets and rate of incentive are decided by the Airlines.
5. Deposit Incentive (DI) is an amount received by the Appellant or a travel agent as an incentive from the Airlines. Under this incentive scheme declared by the Airlines, the travel agent deposits the prescribed lumpsum amount in advance with the stipulation that they will purchase tickets in bulk or a specified quantity during a specified period. Thus, in appreciation of advance deposited towards target purchase of tickets by the travel agent, the Airlines credit a small percentage of the amount, may be 1% or 1.5%, to the account of the travel agent, as an incentive on the purchase of tickets in bulk.
6. It is further pointed out that the issue is no longer res integra and the same was considered by the Larger Bench of this Tribunal in Kafila Hospitality & Travels Pvt Ltd vs CST, Delhi [2021 (47) GSTL 140 (Tri-LB)], wherein, the (3) ST/30240 & 30241/2016 Larger Bench have categorically held that for sale of tickets the travel agent receives from the Airlines, Performance Linked Bonus, which is linked to guaranteed booking of a minimum number of Airline tickets. In certain cases, the sub-agents also book Airline tickets through IATA agent (main agent) and where sub-agents achieve a predetermined target on booking through a particular IATA agent, the main agent pays an incentive to the sub-agent. The CRS companies also allow IATA agents to subscribe to their portal for booking tickets for the passengers/sub-agents. Due to competition, the CRS companies stopped charging the agents and instead, in order to increase their business, started to part with a portion of the commission received by them from Airlines, to the IATA agents when a particular agent achieves a minimum quantum of bookings through the concerned CRS portal.
7. The allegation of Revenue that travel agents were providing Business Auxiliary services to the Airlines for which they were receiving PLB & DI, the Larger Bench held - by rendering services connected to travel by air, a travel agent would render "Air Travel Agent services", which services cannot be said to be for promoting or marketing for the Airlines. The Larger Bench further held that these incentives are paid on general performance of service provider and not related to particular transaction. Hence, they are not considerations liable to service tax under Sec 67 of the Finance Act.
8. Having considered the rival contentions, we find that the issue is squarely covered in favour of the Appellant by the ruling of the Larger Bench in Kafila Hospitality & Travels Pvt Ltd vs CST, Delhi (supra). Accordingly, we allow these Appeals and set aside the Impugned Order. The Appellant shall be entitled to consequential benefits, in accordance with law.
9. We further direct the Adjudicating Authority to grant the refund within the period of 60 days from date of receipt of copy of this Order, along with interest as per rules.
(Operative part of the Order was pronounced in the Open Court) (ANIL CHOUDHARY) MEMBER (JUDICIAL) (A.K. JYOTISHI) MEMBER (TECHNICAL) Veda