Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Dept. Can’t Classify Product as Zarda Scented Tobacco After Repeatedly Approving It As Chewing Tobacco: CESTAT *  Mere Uploading Of GST Order On Portal Is Not “Valid” Service: Tripura HC *  CGST Can Proceed Even If SGST Closed Similar Case Earlier: Delhi HC *  SC upholds 28% GST on online gaming with retrospective effect. *  West Bengal Govt cuts E-way Bill Threshold limit to Rs. 50,000 for intra-state goods movement. *  Criminal Prosecution Under Central Excise Act Can’t Continue After CESTAT Sets Aside Duty Demand on Merits: Punjab & Haryana High Court. *  Madras High Court Quashes GST Assessment Orders for Denial of Personal Hearing; Remands Matter Subject to 10% Deposit *  Ex Parte GST Order: Madras High Court Directs Immediate Removal of Bank/ITC Attachment Upon 25% Deposit *  J.K. Cement Receives GST Demand Order of Rs 8,02,113/- from Ahmedabad Tax Authority *  Delhi Police EOW Busts Alleged Rs. 128 Crore GST Fake Invoice Network. *  REPLY TO SCN CAN’T BE TREATED AS “EMPTY FORMALITY”: ORISSA HIGH COURT QUASHES GST DEMAND OF RS. 57.30 LAKH *  Challenge to CGST Provisions restricting ITC to Bonafide Purchasers : Allahabad HC issues notice *  CBIC Notifies Revised Customs Tariff Values for Edible Oils, Gold, Silver, Brass Scrap and Areca Nuts *  Delhi HC Orders Removal of GST Attachment After Statutory 1 Year Period Expired *  GSTAT Extends Relaxed Appeal Filing Guidelines till December 31, 2026 *  AO fails to Provide Import - Export Data from DGFT to Taxpayer for Reconciliation *  Gold, Silver Imports To Get Costlier As Govt Raises Customs Duty To 10%  *  GSTAT Enables Pre-Payment Access to Document Upload and Checklist for GST Appeal Filing *  GST Portal Restrictions Can’t Override Statute: Gujarat HC Allows Cross-State Transfer Of CGST ITC After Amalgamation *  Centre Revises HS Codes for Large Diameter Steel Pipes Used in Oil & Gas Pipelines *  Customs Duty Liability Arises On Warehouse Clearance Date: Supreme Court *  Government lifts export ban on de-oiled rice bran *  CESTAT Grants 12% Interest on Pre-Deposit for Investigation from Date of Deposit till Refund and Denies Interest on Interest. *  Government Overhauls GST Classification Framework for Non-Alcoholic Beverages; Fruit Juice Drinks, Milk-Based Beverages and Caffeinated Drinks to Attract Revised 5% and 40% GST Rates from May 1, 2026 *  India’s gross GST collections hit a record Rs 2.42 lakh crore in April, up 8.7% *  Customs clearance stalled, revenue hit over MRP dispute *  Shipping Corporation explores Middle East routes as Hormuz tensions disrupt cargo movement *  India, Kenya signs MoU for exchange of pre-arrival customs information *  No demand of Taxes under Reverse Charge if Tax Already Discharged by Service Provider under forward charge *  The India-New Zealand Free Trade Agreement, signed "once-in-a-generation" deal that eliminates tariffs on 100% of Indian exports to New Zealand
Subject News *  Consignment Sales Can’t Be Reclassified as Inter-State Sales Based on Pre-Agreement Evidence: CESTAT *  Exporter Can’t Be Denied Advance Authorization Benefit Due To ICEGATE Technical Glitch: Delhi High Court *  No GST Demand For Mere Wrong Set-Off Of IGST Credit Under CGST And SGST Heads: Kerala HC. *  Cenvat Credit Can’t Be Denied on Input Services Having Nexus With Manufacturing Activities: CESTAT *  Pending Proceedings Can’t Survive Without Saving Clause: Calcutta High Court Quashes GST Demand of Rs. 6.28 Crore After Omission of Rule 96(10) *  Madras HC Quashes GST Demands on TASMAC (Tamil Nadu State Marketing Corporation) Bar Licence Fee *  GST Proceedings Cannot Survive Omitted Rule Without Saving Clause: Calcutta HC *  Provisional Release Can’t Be Denied Solely On Dept. Suspicion Of Misclassification And Undervaluation Of Imported Goods: CESTAT *  Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court *  Punjab & Haryana HC Directs Reconsideration of Contractors’ Claim for Additional GST Payment After Tax Rate Hike From 12% to 18% *  S. 108 Statements Can’t Be Sole Basis Without Following Section 138B Procedure: CESTAT *  Bombay High Court Frames Key Questions on Mandatory Distribution of ITC U/s 20 CGST Act *  Filing of Annexure-B for Refund Applications involving Accumulated ITC using the offline utility in GST portal: GSTN *  No Service Tax on Parent Company’s Un-Invoiced Cost Allocations Without Actual Service or Consideration: CESTAT  *  Calcutta High Court Upholds GST Classification of Polypropylene Leno Bags as Plastic Products *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  GSTAT Issues Major Bench Allocation Framework; All Appeals to First Go Before Division Bench *  ITC Blocking Without Reasoned Order Violates Rule 86A; Punjab & Haryana HC Directs Release of Credit *  Allahabad HC Refuses Bail to CGST Superintendent In Rs. 70 Lakh Bribery Case *  S.130 Can’t Be Invoked Without Prior Tax Determination U/s 73/74: Allahabad High Court Quashes GST Confiscation Proceedings *  SC grants Bail to Rs 54cr GST case  *  Karnataka HC Sets Aside Duplicate GST Orders, Orders Fresh Hearing on GSTIN Cancellation *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  Transfer Of Unutilized ITC After Amalgamation - Supreme Court Issues Notice *  PUNJAB & HARYANA HC QUASHES GST CANCELLATION NOTICE FOR FAILURE TO PROVIDE CBIC ENQUIRY REPORT *  LICENSE FEE, TECHNICAL ASSISTANCE CHARGES NOT INCLUDIBLE IN CUSTOMS VALUE UNLESS THEY ARE A CONDITION OF SALE: CESTAT *  DELHI HC ORDERS REMOVAL OF GST ATTACHMENT AFTER STATUTORY 1 YEAR PERIOD EXPIRED *  CUSTOMS BROKER CAN’T BE FAULTED JUST BECAUSE EXPORTER’S GST REGISTRATION WAS PREVIOUSLY CANCELLED: CESTAT   *  Supreme Court Dismisses Review Plea Against Delhi HC Ruling Holding Real Operator Behind Fake GST Firms Liable As ‘Taxable Person  *  GST Appeal Can’t Be Rejected Merely Because DRC-07 Was Not Uploaded On Portal: Bombay High Court  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/2988

whether service tax is chargeable on incentives received for using software of travel tickets?

Case:- PEGASUS TRAVELS AND TOURS PVT. LTD. Versus JOINT COMMR. OF C. EX., CHENNAI
 
Citation:- 2015 (40) S.T.R. 27 (Mad.)
 
Brief facts:-Heard Mr. K. Vaitheeswaran, learned Counsel for the petitioner and Mr. K. Ravi Anantha Padmanaban, learned Senior Central Government Standing Counsel appearing for the respondent.
The order of the respondent passed in order-in-original No. 14/2010 dated 23-2-2010, has been called in question, by the petitioner, seeking to quash the same, as the same is beyond the scope of the provisions of the Finance Act, 1994, as amended.
 
According to the petitioner, they are the company engaged in rendering services of booking of air tickets and a registered assessee under the provisions of the Finance Act, 1994, as amended and discharging Service Tax in accordance with law, for which, the petitioner used Centralised Reservation System for booking of air tickets and receives incentive from the developers of the system. The petitioner did not pay Service Tax on the incentive, since there is no service provider- client relationship between the petitioner and the CRS developers. While so, the department issued a show Cause Notice No. 80/2009, dated 24-3-2009 proposing to impose Service Tax on the incentive received, categorizing the activity under Business Auxiliary Service as defined under Section 65(19)(ii) of the Finance Act, 1994 and has issued summons, to which the petitioner-company has filed their objections against the proposals to impose Service Tax on the incentive, vide their letter dated 20-4-2009 and appeared before the adjudicating authority on 18-1-2010. However, the respondent has passed the impugned Order-in-Original No. 14/2010, dated 23-2-2010 confirming the proposals in the Show Cause Notice.
The said order of the original authority has been challenged in this writ petition on the ground that there is no service provider- client relationship for the purpose of imposing Service Tax and the impugned order is against the law laid down by the Supreme Court in cases of Saci Allied Products Ltd. v. Commissioner of Central Excise, Ballarpur Industries Ltd. - 2005 (183)E.L.T.225 (S.C.), Metal Forgings v. UOI - 2002 (146)E.L.T.241and CCE v. Ballarpur Industries Ltd. - 2007 (215)E.L.T.489.
 
Appellant’s contention:- Mr. K. Vaitheeswaran, learned Counsel appearing for the petitioner in his submissions, strenuously contended that the original authority has not looked into the legal principles on the service provider- client relationship between the petitioner and the Central Reservation System and without looking into provisions under Section 65(19)(ii) of the Finance Act, confirmed the proposal for imposing Service Tax in respect of the incentive received by the petitioner and therefore, the impugned order is legally infirmed.
 
Respondent’s contention:- On the other hand, Mr. K. Ravi Anantha Padmanaban, learned Senior Central Government Standing Counsel appearing for the respondent submitted that as against the order of the original authority, there is an effective alternative remedy of appeal available under the relevant Act and the same is also indicated in the impugned order of the original authority by stating that any person deeming himself aggrieved by the order, may appeal against it to the Commissioner (Appeals) and it is further stated in the impugned order that the appeal shall be filed in the prescribed form, in quadruplicate, within three months from the date of receipt of the order and the appeal should bear a Court fee stamp of Rs. 4/- and any person desirous of appealing against the order shall, pending appeal, deposit the service tax/interest/penalty involved therein and produce proof of such payment along with the appeal and therefore, without availing the remedy the petitioner has rushed to this Court, invoking the jurisdiction under Article 226 of Constitution of India, which is not maintainable.
 
Reasoning of judgment:- They have heard the learned Counsel appearing for the parties and perused the material documents available on record.
 
It is not is dispute that the petitioner is an assessee and they are engaged in the business of rendering services of booking of air tickets and a registered assessee under the provisions of Finance Act, 1994, as amended and is discharging Service Tax in accordance with law, for which, the petitioner used centralised Reservation System for booking of air tickets and receives incentive from the developers of the system. The petitioner did not pay Service Tax on the incentive, since there is no service provider-client relationship between the petitioner and the CRS developers. The respondent has proceeded by issuing show cause Notice No. 80/2009, dated 24-3-2009 deposing to impose Service Tax on the incentive received, categorizing the activity under Business Auxiliary Service as defined under Section 65(19)(ii) of the Finance Act. The petitioner has filed their objection and appeared before them and thereafter, the original authority passed the impugned order confirming the proposal made in the Show Cause Notice.
 
The question raised by the petitioner is that there is no service provider-client relationship between the petitioner and CRS developers. Ultimately, the original authority has come to a conclusion by confirming an amount of Rs.11,58,715/- (Rupees Eleven Lakhs Fifty Eight Thousand and Seven Hundred and Fifteen only) being the Service Tax and Rs. 20,592/- (Rupees Twenty Thousand Five Hundred and Ninety Two Only) being Secondary & Higher Education Cess demanded under proviso to Section 73(1) of the Finance Act, 1994 on the income earned under the category of “Business Auxiliary Service” for the period from November 2003 to March 2009; The respondent further confirmed the interest at the appropriate rates under Section 75 of the Finance Act, 1994 for the Service Tax and Education Cess not paid and then finally imposed a penalty of Rs. 11,87,599/- (Rupees Eleven Lakhs Eighty Seven Thousand Five Hundred and Ninety Nine Only) under Section 78 of the Finance Act, 1994. However, it was observed by the respondent that the penalty imposed under that section would be Rs. 2,96,900/- if the Service Tax, Education Cess and interest demanded are paid within 30 days of receipt of the order and the authority has decided to impose any penalty under Section 76 of the Act, since the penalty imposed under Section 78 would suffice the ends of justice.
 
The claim made by the petitioner is that the incentive received by them is not taxable and there is no service provider-client relationship and the same is only through electronic media namely Centralised Reservation System and therefore, no service is rendered. Hence there is no question of imposing Service Tax on the incentive received from the developers of the system. The conclusion was arrived at by the original authority on the various points adjudicated before them and the proposal for payment of Service Tax was confirmed under the provisions of Finance Act, taking into account the various decisions cited by both parties apart from payment of Service Tax, Education Cess as well as interest and penalty. These are all the matters which can be adjudicated before the statutory appellate forum and those appellate forums are created to look into the aspects which the original authority has not considered.
Law is well settled that before filing a writ petition, when there is an effective alternative statutory remedy of appeal against the order passed by the original authority and when an appellate authority is created under the statute, the same has to be availed of by any person who is aggrieved by the order of the original authority. It is trite law that if the order passed by the original authority is in violation of the fundamental rights guaranteed under the Constitution of India, violation of the principles of natural justice; ultra vires the provisions of the relevant law; grave error in the order and miscarriage of justice, then the question of waiving the appellate remedy will arise and this Court, under Article 226 of the Constitution of India, can invoke the writ Jurisdiction and interfere with such order passed by the original authority.
It is not the case of the petitioner that the order in question is challenged before this Court as there is a violation of fundamental rights or principles of natural justice or ultra vires the provisions of the Act and the Rules and or even to the extent of grave error or injustice has been done by the original authority. In the absence of any such plea, contentions raised by the learned Counsel for the petitioner, may be looked into by the appropriate authority, namely the appellate authority to set right the order in question passed by the original authority.
In the present case, the petitioner has not availed of the statutory remedy of appeal against the impugned order. The approach of the petitioner in rushing to this Court by filing this writ petition, challenging the order of the original authority, without even availing of the statutory remedy of appeal before the appellate authority, cannot be sustained.
At this stage, the learned Counsel for the petitioner made a plea that the petitioner is prepared to go before the appellate authority against the impugned order dated 22-3-2010.
Considering the said plea made by the learned Counsel for the petitioner, the petitioner shall prefer an appeal before the appellate authority within a period of two weeks from the date of receipt of a copy of this order. It is needless to state that if such appeal is adjudicated by the petitioner, the same may be considered by the appellate authority and appropriate orders be passed on merits and in accordance with law, as expeditiously as possible. Since there is an interim order operating during the period of pendency of the writ petition, the said period shall be excluded for the purpose of limitation in filing an appeal.
With the above observations and directions, this writ petition is disposed of. No costs. Consequently connected miscellaneous petition is closed.
 
Decision:- Petition disposed of.
 
Comment:- The analogy of the case is that Petitioner challenged confirmation of demand of service tax on incentives received for using software of a software provider in issuing travel tickets Contention being that there being no relation of service provider and receiver, Service Tax not chargeable. No case having been made out by petitioner of violation of fundamental rights or natural justice or ultra vires of provisions or grave error or injustice, alternate remedy in form of statutory appeal to be exhausted first. Contentions of non-levy of tax raised by petitioner require to be looked firstly by appellate authority only. Petitioner allowed filing statutory appeal within two weeks.
 
Prepared by:- Monika Tak 
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com