Whether purchase of tickets by air travel agent from General Sales agent leviable to service tax under BAS?

PJ/CASE LAW/2014-15/2461

Case:-AKBAR TRAVELS OF INDIA PVT LTD Vs COMMISSIONER OF SERVICE TAX, MUMBAI

Citation:-2014-TIOL-2291-CESTAT-MUM

Brief facts:-The appeal and stay petition are directed against order-in-original No. 11/ST(Adjudication)/RP/2013-14 dated 26.12.2013 passed by the Commissioner of Service Tax (Adjudication), Mumbai. Vide the impugned order, the learned adjudicating authority has confirmed the service tax demand of Rs. 86,32,333/- for the period 2004-05 to 2011-12 along with interest thereon and also imposed penalties under the various provisions of the Finance Act, 1994 against the appellant M/s. Akbar Travels of India Pvt. Ltd. The adjudicating authority has classified the service rendered by the appellant under 'business auxiliary service'. Aggrieved of the same, the appellant is before Tribunal.

Appellant’s contention:-The learned consultant for the appellant submits that the appellant herein is an air travel agent. When the customer comes for booking of passage by air, they purchase the ticket from the airline and give to the customers and on the agency charges, they discharge service tax liability under the category of 'air travel agent's service'. In respect of smaller airlines, some time they purchase the tickets from general sales agent (GSA) of the airlines, who issue tickets in the name of the travellers and hands over the tickets in the name of the travellers and hands over the tickets to the appellant for further handing over to the airline travellers. On the entire commission, the GSAs discharge service tax liability and a part of the commission is given to the appellant. A part of the commission so received is given to the travellers by way of reduction of the price of the tickets. The department seeks to levy service tax on the commission given to them by the GSAs (on which service tax liability has already been discharged) under the category of 'business auxiliary service'. It is his submission that the liability to service tax under air travel agent service has been discharged by the GSA and, therefore, subjecting the same once again to service tax under the category of business auxiliary service does not arise. He relies on the decision of this Tribunal in the case of Zuari Travel Corporationdecided byorderNo. A/1716/13/CSTB/C-I dated 18.7.2013, where a more or less an identical issue was considered and it was held that air travel agent who purchased tickets from IATA and sold the same to the traveller would be rendering air travel agency service and not business auxiliary service. Following the ratio contained therein, a coordinate Bench of the Tribunal, Bangalore, has also granted stay in applicant's own case vide order No. 21448/2014 dated 25.6.2014.

Respondent’s contention:-The learned Additional Commissioner appearing for the Revenue reiterates the findings of the lower authority and submits that since the appellant is getting a commission from GSA, it is promoting the business of the GSA and, therefore, the service rendered should be classified as 'business auxiliary'.

Reasoning of judgment:-The service rendered by the appellant herein is booking of passage for travel by air, which is squarely covered by the definition of 'air travel agent service' as defined in Section 65(4). As per the said definition, an air travel agent means any person engaged in providing any service connected with the booking of passage for travel by air and the taxable services means any service provided or to be provided by any person by an air travel agent in relation to the booking of passage for travel by air. In view of the above statutory definitions, any activity in relation to booking of passage by air travel agent would be covered under 'air travel agency service'. Whether the ticket is bought directly from the airline or through the GSA, the same would not make any difference. Therefore, the confirmation of demand under 'business auxiliary service' does not appear to be prima facie sustainable in law. This is the view taken by the Tribunal in the case of Zuari Travel Corporationand the appellant's own case cited supra. Hence the appellant has made out a strong case for waiver of dues. Accordingly we grant unconditional waiver from pre-deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal.

Decision:-Stay granted.

Comment:- The analogy of the case is that following the decision given in the case of Zuari Travel Corporation, air travel agent who purchases tickets from General Sales Agent and sells the same to the traveller would be rendering air travel agency service and not business auxiliary service. Any activity in relation to booking of ticket by air travel agent irrespective of the fact whether ticket is bought directly by airline or through GSA, would be covered under air travel agency service and not under business auxiliary service.

Prepared by:- Monika Tak

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PJ/CASE LAW/2014-15/2461

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