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ST - Whether ticket is bought directly from airline or through General Sales Agent (GSA), same would not make any difference - classifying services under BAS and demanding tax is not sustainable: CESTAT

 

By TIOL News Service

MUMBAI, MAY 22, 2018: THE appellant is engaged in rendering of services as air travel agent and is registered accordingly.

The appellant approached General Sales Agent (GSA) for booking of the tickets which is issued directly in the name of passenger. Service tax is charged by the GSA on such tickets booked by him. The invoices are issued in the name of the appellant for the reason that the GSA was not interacting directly with the passenger.

The appellant raises invoices to the customers for the sale of tickets. The difference in the amount charged by the GSA to the appellant and the appellant to the customer is the commission earned by the appellant.

The appellant did not pay the service tax on the said commission based on the contention that the services are appropriately classified under 'air travel agent services' and exempt under notification No. 22/1997-ST dated 26/06/1997 and the service tax has already been discharged by GSA on the sale of tickets.

The DGCEI did not agree. SCN was issued and the demand of Service Tax of Rs.86,32,333/- was confirmed for the period 2004-05 to 2011 along with interest and penalties.

The appellant is before the CESTAT.

They relied upon the Tribunal decision in Zuari Travel Corporation [Appeal No. ST/309/2006 Order No. A/1716/13/CSTB]  - 2013-TIOL-2301-CESTAT-MUM involving identical facts and pleaded that the demand be set aside.

The AR, while reiterating the findings of the adjudicating authority submitted that since the appellant is getting commission from GSA, it is promoting the business of GSA and, therefore, the services rendered is rightly classified under 'business auxiliary service'.

The CESTAT observed -

"9. In view of the statutory definition, any activity in relation to booking of passes by air travel agent would be covered under 'air travel agency services'. Whether the ticket is bought directly from the airline or through the GSA the same would not make any difference.

10. Further, we find that this issue is squarely covered in favour of the appellant by the Division Bench decision in the case of  Zuari Travel Corporation (supra)."

The impugned order classifying the service under "Business auxiliary service" was set aside as being unsustainable in law and the appeals were allowed with consequential relief.

(See 2018-TIOL-1583-CESTAT-MUM)


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