By TIOL News Service

NEW DELHI, AUG 03, 2013 : THE appellant is a travel agent using the automated reservation system/global distribution system developed by M/s Amadeus , with whom the appellant entered into a business relationship through its Indian arm M/s Amadeus India Pvt. Ltd.

M/s Amadeus India paid commission to the appellant for using the software connectivity tool through a compatible hardware provided by M/s Amadeus India which enabled the appellant to book airline tickets of several airlines, to service their customers. The software connectivity provides the appellant access to over 95% of the airlines seats. The symbiotic relationship also facilities extension of Amadeus India's footprint in the airlines tickets booking business, through employment of its software by the appellant.

Alleging that this activity constitutes the taxable Business Auxiliary Service, provided by the appellant to M/s Amadeus India , since it amounts to promotion of services provided by M/s Amadeus India Pvt. Limited , proceedings were initiated for recovery of Service Tax of Rs. 23,19,378/- and the same was confirmed by the lower authorities.

Before the CESTAT the appellant submitted –

+ the Commissioner (Appeals), Bangalore vide his order dt. 28.03.2008, in their own case, had concluded that the amount received from M/s Amadeus India is not taxable under the category of Business Auxiliary Service, as M/s Amadeus India was not the client of the petitioner and any support extended by the petitioner falls under the category of Business Support Service w.e.f. 01.05.2006 and not Business Auxiliary Service. A substantially similar view in their case was also taken by the Commissioner(A), Chennai in his order 29.06.2011.

+ a similar view was also taken by the Commissioner (Appeals) Chennai in his order dated 23.08.2011 in respect of a similarly circumstanced travel agency, M/s Starlines which also had a business relationship with M/s Amadeus India and in respect of substantially similar circumstances, received a commission for using the Amadeus service.

+ reference is also made to the order of the Tribunal in M/s Jose Travels vs. CCE, Indore- (2011-TIOL-1983-CESTAT-DEL) , wherein the Members constituting the Division Bench differed on the taxability of the commission received by the travel agency inasmuch as use by the appellant therein of the CRS developed by Amadeus India was prima facie concluded to be a Business Auxiliary Service by one Member; and not so by the other.

The Bench observed -

“4. Since there is an as yet unresolved conflict on the issue, we prefer to proceed on a prima facie analysis of the transaction as adverted to in the adjudication order. As is apparent, the petitioner is required under the agreement with M/s Amadeus India to exclusively use only the Amadeus India provided software for connectivity employing the enabling hardware, also furnished by M/s Amadeus India. This interface/synergy between the petitioner and M/s Amadeus India provides the petitioner travel agency access to a cosmos of connectivity for booking airline tickets, of several airlines in the world for beneficial employment in the core business of the petitioner which is a travel agent. The complementary benefit derived by M/s Amadeus India is an expansion of its footprint in its core business, with airlines, with regard to booking of tickets of the airlines, by travel agents such as the petitioner. Prima facie, it does not appear that the commission received by the petitioner from M/s Amadeus for using its software and hardware, falls outside the pale of Business Auxiliary Service, provided by the petitioner to M/s Amadeus India. However, whether a case of willful suppression or contravention of the provisions of Act with an intent to evade tax can be said to have occurred, is a matter to be considered at the final hearing. The order of the Commissioner (Appeals) Bangalore and Chennai and the conflict in the interim order in Jose Travels are illustrative of an extant ambiguity in the legal position, at least for the nonce.”

In fine, the Bench directed pre-deposit of the amount of Rs.11,87,000/- being the service tax liability for the normal period of limitation for obtaining stay.

(See 2013-TIOL-1165-CESTAT-DEL)