Custom, Excise & Service Tax Tribunal
Cst, Chennai vs No. 101/2010 (Mst) Dated 10.5.2010 on 27 February, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH, CHENNAI Appeal No. Appellant Respondent
Arising out of Order-in-Appeal passed by CCE (Appeals), Chennai ST/534/2010 New Royal Link Travels CST, Chennai No.95/2010 (MST) dated 30.4.2010 ST/535/2010 Fly Albatross Travels & Tours Pvt. Ltd.
CST, Chennai No. 97/2010 (MST) dated 30.4.2010 ST/569/2010 Milesworth Travels & Tours Pvt. Ltd.
CST, Chennai No. 109/2010 (MST) dated 26.5.2010 ST/490/2010 Casio Air Travels Pvt. Ltd.
CST, Chennai No. 101/2010 (MST) dated 10.5.2010 Appearance Ms. Radhika Chandrasekar, Shri T.Ramesh and Ms. Cynduja Crishnan Advocates for the Appellants Shri K.P. Muralidharan, AC (AR) and Shri S.Govindarajan, AC (AR) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of Hearing / Decision: 27.02.2018 Final Order Nos. 40506-40509 / 2018 Per Bench The issue basing for consideration in these appeals being the same, they were heard together and are disposed by this common order. Appeal No. ST/534/2010 is taken as reference for discussing the facts of the case.
2. The appellants are IATA accredited air travel agent and registered with the department under the category of Air Travel Agent Service. Their activity included booking of air tickets for their customers. In providing services of air travel ticket booking, the appellants used centralized Computer Reservation Systems (CRS) software supplied by M/s.Amadeus India Pvt. Ltd. Pursuant to audit, it was noticed that apart from their regular business the appellants had earned income by way of incentive from M/s. Amadeus for use of CRS-Amadeus software in their business. The appellants had not discharged service tax on the said incentive received by them. Show cause notices were issued proposing demand of service tax on the incentive received along with interest and also for imposing penalties. After due process of law, the original authorities confirmed the demand of interest and penalties. In appeal, Commissioner (Appeals) upheld the same. Hence these appeals.
3. On behalf of the appellants, ld. counsel Ms. Radhika Chandrasekar fairly conceded that the very same issue stands decided against the assessees in the decision of D. Pauls Consumer Benefit Ltd. Vs. Commissioner of Central Excise, New Delhi 2017 (52) STR 429. However, she argued that the appellant uses the CRS-Amadeus software for booking the tickets for which they receive incentive from Amadeus for using their software. The said amount is only an incentive and not a consideration for providing services. While using the software, there is no service provider service recipient relationship and therefore the incentive received cannot be subject to levy of service tax. She submitted that by default the software has to be used by the air travel agent for booking the tickets on behalf of the customers. In addition, ld. counsel submitted that the period involved is partly hit by limitation. The appellants had no intention to suppress facts or evade payment of service tax. They were under bona fide belief that the said amount received as incentive for use of the centralized software is not subject to levy of service tax.
4. In Appeal No. ST/569/2010, ld. counsel Shri T.Ramesh appearing for the appellant strongly argued on the ground of limitation and submitted that the entire period is hit by time-bar. He submitted that there is no evidence to establish that the appellant had suppressed facts and therefore invocation of extended period cannot sustain.
5. The ld. counsel Ms. Cynduja Crishnan argued that the issue being interpretational one, penalties may be set aside invoking Section 80 of the Finance Act, 1994 as it stood during the relevant period.
6. The ld. AR Shri K.P. Muralidharan reiterated the findings in the impugned order.
7. Heard both sides.
8. The issue whether the appellants are liable to pay service tax on the incentives received for using Computer Reservation System has been settled by the decision of the Tribunal in the case of D. Pauls Consumer Benefit Ltd. (supra). The relevant portion of the order is reproduced below:-
5.?After hearing the rival submissions and on perusal of record, it appears that the assessee-appellants are travel agent and providing the tickets for air as well as railways. They also act as the Rail Travel Agents Service which is covered under Section 65(87) of the Finance Act, 1994 and liable to pay the Service Tax. Regarding the commission/incentive received from GDS/CRS, it may be stated that the said GDS/CRS companies are providing adequate free of cost computers with essential accessories and software to the travel agents at their premises. These computers are connected worldwide to the GDS/CRS, which linked to ticket sales offices of various airlines, hotels and car rental agencies spread across the world. They are by using these GDS/CRS for booking tickets, receiving incentives from the said companies for every segment booked by them. Hence, the service provided by the assessee-appellants has rightly been covered under the heading Business Auxiliary Service as defined under Section 65(19) of the Finance Act, 1994. Thus, we are of the view that the assessee-appellants being providing Tour Operators Service, the commission received by them is for Business Auxiliary Service under Section 73(1) of the Finance Act, 1994. The case law cited by the learned counsel for the assessee-appellants is not applicable in the instant case as the same was dealing with the advertising agencies. So, on the facts, the ratio laid down in the said case is not applicable to the present case.
6.?Needless to mention that in the Central Excise, Customs & Service Tax Budget, 2016-17 (published by the Legal Matrix Publications, Delhi-9, on Page 258) makes a reference to High Level Committee and states that certain issues were clarified and there in Paragraph 15.1.2, it was mentioned that :
15.1.2?It is clarified that incentives received by the Air Travel Agents (ATAs) from the Companies providing Computer Reservation System (CCRS) are for using the software and platform provided by the CCRS like Galileo, Amadeus, etc. The CCRS are providing these incentives either for achieving the targeted booking of air tickets or for loyalty for booking of air tickets using their software system. Thus, the service provided by CCRS is to the Airlines and Air Travel Agent is promoting the service provided by CCRS to Airlines. Thus, the service provided by the ATAs to CCRS is neither covered in the negative list (Section 66D of the Finance Act, 1994) nor exempt by a notification. Therefore, service tax is leviable on the same.
9. Following the same we find that the demand is sustainable. However, taking note of the submissions made by the Advocates for the appellants that they have given reasonable explanation for the failure to discharge the service tax, we are of the considered opinion that the imposition of penalties is unwarranted. The appellants were under bona fide belief that the incentive received for using the CRS software is not leviable to service tax. Further, by default they have to use the said software for booking the tickets. Therefore, we set aside the penalties imposed under Sections 76, 77 and 78 of the Finance Act, 1994 as applicable in all these appeals.
10. In the result, the impugned orders are modified to the extent of setting aside the penalties imposed without disturbing the demand of service tax or the interest thereon. Appeals are partly allowed in the above terms.
(Operative portion of the order was
pronounced in open court)
(Madhu Mohan Damodhar) (Sulekha Beevi C.S.)
Member (Technical) Member (Judicial)
Rex
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