PER P. ANJANI KUMAR

1. The appellant, M/s TSC Travel Services Pvt. Ltd. are engaged in “Air Travel Agents Services” and are recognized by IATA; the appellants are registered and are discharging service tax in terms of Section 67 of the Finance Act, 1994 for the services rendered as defined under Section 65(105)(l) of Finance Act, 1994; the appellant issue air travel tickets on behalf of domestic and international airlines; as per requirement the appellants were also buying tickets from other GSA/IATA agents and sale the same to the clients; the other GSA/IATA agents passed on discount or commission given by the airlines to the appellants after retaining a portion of the same; the appellants to retained some portion and passed on the same to their customers. Revenue is of the opinion that the commission retained/earned by them is towards the service rendered by them to the co-GSA/IATA for the business auxiliary services provided by the appellants to co-GSA/IATA agents. A show cause notice has been issued and was confirmed by the order-in-Original dated 13.12.2012. Hence, the appeal.

2. Shri Sudhir Malhotra, Ld. counsel for the appellant submits that the appellants buy tickets from other GSA/IATA agents and sale to their customers in normal course of trade; they are not agents of other GSA/IATA agents; the other GSA/IATA agents pay service tax on their commission and a part of the commission to the appellant; the sale and purchase of goods/services are not chargeable to service tax. He submits that the issue is no longer res integra and decided by the Tribunal in the following cases:

• Om Air Travels Pvt. Ltd. 2019 (25) GSTL 460 (T)
• Trade Wings Ltd. Vs. Commissioner of Central Excise and Service Tax, 2017 (52) STR 149 (T)
• Akbar Travels of India Pvt. Ltd. Vs. CCE ST 2019 (22) GSTL 427 (T)
• Kafila Hospitality & Travels Pvt. Ltd. Vs. ST 2021 (47) GSTL 140 (Tri.-LB).

3. Ld. Counsel further submits that the adjudicating authority erred in demanding service tax under two different categories i.e. “Air Travel Agents Services” and “Business Auxiliary Services”; specific sub-heading under business auxiliary services has not been spelt out either in the show cause notice or in the impugned order. He submits moreover, that the show cause notice is time barred; the time limit prescribed for issue of show cause notice during the period was one year i.e. from date on which the periodic return was to be filed; the impugned case, half yearly return for the period April to September, 2010 was to be filed on 25.10.2010 and for the period October, 2010 to March, 2011, the return was required to be filed on 25.04.2011; therefore, the show cause notice required to be issued on or before 25.04.2011; the show cause notice was issued on 04.04.2012. There was no suppression, mis-statement, collusion, fraud etc with intent to evade payment of tax and therefore, extended period cannot be invoked. He submits that regular audit has been conducted on the records of the appellants and after the second audit show cause notice invoking extended period has been issued and the same is not permissible. He relies on the following decisions:

• Collector of Central Excise Vs. Malleable Iron & Steel Casting Co. Pvt. Ltd. 1998 (100) ELT 8 (SC) [LQ/SC/1997/1616] .
• Commissioner of Service Tax Vs. Naresh Kumar & Company Pvt. Ltd 2022 (67) GSTL 324 (Cal)
• Uniworth Textiles Ltd. Vs. CCE 2013 (288) ELT 161 (SC) [LQ/SC/2013/98] .
• Cosmic Dye Chemical vs. Collector of Central Excise Bombay 1995 (75) ELT 721 (SC).

4. He further submits that simultaneous penalty cannot be imposed under Section 76 and Section 78 of the Finance Act, 1994 as held by the jurisdictional High Court in the case of Pannu Propedrty Dealers, Ludhiana- 2011 (24) STR 173; First Flight Courier Ltd. 2011 (22) STR 622 and City Motors 2010 (19) STR 486.

5. Shri Nikhil Kumar and Shri Shivam Syal Ld. authorized representatives for the revenue submits that the adjudicating authority categorically examined the issue whether the margin received by the appellant from the agents other than an airline on account of booking selling tickets on behalf of the same is covered under “Business Auxiliary Services”; the impugned order has clearly established the principle and agent relationship; the amount earned on the sale/purchase of air tickets by the appellants on behalf of the agents other than airlines is not a trading activity but a provision of service of commission agent and is squarely covered by the explanation to sub-clause (vii) of the definition of business auxiliary service under Section 65 (19) of Finance Act, 1994 and as taxable under Section 65 (105)(zzb) ibid. Ld. authorized representative submits that it is incorrect to say that specific service was not mentioned under business auxiliary service; High Court of Delhi in the case of ITC Ltd. 2014 (36) STR 481 Delhi held that in examining a show cause notice, the object and purpose to inform the recipient of the allegations are to be taken care of; the same has been done in the show cause notice. They also submit that revenue neutrality is not a criteria to decide the taxability; the argument that the appellant need not pay service tax under business auxiliary service as the coGSA/IATA agent has paid service tax under “Air Travel Agent Service” is not acceptable in view of the judgment in the case of Northern Operating System pvt. Ltd. 2022 (61) GSTL 129 (S.C.).

6. Heard both sides and perused the record of case.

7. On perusal of records, it is seen that the appellant are IATA approved ticketing agents; they booked tickets directly from the airlines are co-GSA/IATA operators. In cases where they purchased tickets from co-operators they earned some commission; Revenue alleged that this commission earned is towards the business auxiliary service rendered by the appellants to the co-providers; the revenue is on the point that the appellants are working as commission agents for their co-operators. On going through the explanation given under Section 65(19) commission agent means a person who acts on behalf of as a person and causes sale or purchase of goods, provision or receipt of services, for a consideration and includes any person who does some of the things, while acting on behalf of another person. It is alleged that the appellants are commission agents for their cooperators and are earning commission for the same and therefore they are rendering business auxiliary service to their co-operators. However, the practice of the trade, if observed closely, would indicate that the appellants are buying tickets on behalf of their customers/clients and not definitely on behalf of their co-operators. To this extent, we find that the entire surmise in the show cause notice is ill conceived. The relation between the appellant and the cooperators appears to be one of the principal-to-principal basis. If at all the appellants are presumed to be acting on behalf of somebody else for a commission, it is their customers/clients for whom they are buying tickets from other GSA/IATA operators. However, this is not the allegation in the show cause notice. Therefore, we do not find any principal and agent relationship between the other GSA/IATA operators and the appellants.

8. Tribunal had an occasion to deliberate on the very same issue wherein Tribunal came to the conclusion that purchase and sale tickets for a commission between two agents operating under GSA/IATA does not amount to rendering any service exigible to service tax. Tribunal in the case of Om Air Travels Pvt. Ltd. (Supra) finds as follows :

“4. Heard both the sides and perused the records. We find that the Ld. Commissioner (Appeals) while dropping the demand held that purchasing a ticket on discounted price and selling them to customer is a trading activity hence the trade margin will not be taxable. In the fact that the appellant is purchasing the ticket on discounted price and selling the same at higher price to the customer, the difference, in our view, is a trade margin during the process of sale and purchase of the tickets. Therefore, we do agree with the contention given by the Ld. Commissioner (Appeals). Accordingly, the demand raised on trade margin of purchase and sale of the tickets shall not be taxable. Hence the impugned order is upheld, Revenue‟s appeal is dismissed.”

9. Further, Tribunal observed in the case of Akbar Travels of India Pvt. Ltd. (Supra) that:

“5. Learned Counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without considering the facts and the law. He further submitted that the impugned order is contrary to binding judicial pronouncements. He further submitted that the appellant is acting as an air-travel agent and when the customer comes for booking of passage by air, they purchase the tickets from the airlines and given to the customers and on the agency charges they discharged service tax liability under the category of „air travel agency services‟. In respect of smaller airlines, sometime they purchase the tickets from the GSA of the concerned airlines but issue tickets in the name of traveler and hands over the tickets to the appellant for further handing over to the airline travelers. On the entire commission, the GSA discharges service tax liability and part of the commission is given to the appellant. The part of the commission so received is given to the travelers by way of reduction of the price of the tickets. He further submitted that the department seeks to levy service tax on the commission given to them by the GSA (on which service tax liability has already been discharged) under the category of „business auxiliary service‟. It is his further submission that the liability to service tax under „air travel agent services‟ has been discharged by GSA and, therefore, subjecting the same once again to service tax under the category of „Business Auxiliary Service‟ does not arise. In support of this submission he relied upon the decision of this Tribunal in the case of Commissioner of Central Excise, Goa v. Zuari Travel Corporation [Appeal No. ST/309/2006 Order No. A/1716/13/CSTB] wherein on identical facts, the Division Bench of this Tribunal has held -

“5.3 In the case of Airlines Agents Association (supra), a question arose before the Hon‟ble High Court of Madras was as to whether the services rendered by GSA/IATA agent is the services rendered to the Airlines or is it the services rendered to a customer and the Hon‟ble High Court held as follows :-

16. In our opinion, the observations made in BuxaDooars Tea Co. Ltd. case, cited supra, and more particularly those in paragraph 11 thereof cannot be read out of context. The situation regarding the levy and the measure of the tax was entirely different. It was found as a fact that the measure of the tax had no nexus with levy therein. In our case, however, such is not the position. We have already shown that the „measure of the tax‟ provided by Section 67(k) cannot be said to be totally connected with the services offered by the air travel agents which is the main subject of tax. Therefore, we hold that the observations in BuxaDooars case, cited supra, in paragraph 11 which have been quoted by us would not be applicable to the present situation. This is apart from the fact that the observations in paragraphs 10 and 11 of the BuxaDooars case were not approved by the Supreme Court in Goodricke Group Ltd. case, cited supra, was entirely different but, that is a different subject altogether. We have already held that Section 67(k) which provides the „measure of the tax‟ is not unconnected with the main levy of the tax for the reasons that we have already given above.

17. We have already shown here that the provision of Section 67(k) does not in any manner alter the nature of tax and does not shift it from the service rendered to the customer to the service rendered to the airlines. The contention, therefore, is clearly incorrect on facts.

18. The further argument that the notification dated 26-6-1997 restricts the tax to the commission alone is repugnant to the scheme of the tax is obviously incorrect for the reasons given by us. The basis of the argument that the commission received from the airlines by the air travel agent is taken a measure for imposing a levy on a different service rendered to the customer by the agent is itself incorrect. We, therefore, reject the argument that the impugned provision of Section 67(k) is repugnant to the general scheme of the Act and, therefore, it should fail or that there is anything repugnant in that provisions and the definition clause as also Section 67(k) which is a charging provision.‟

5.4 In our considered view, the question before us is also identical. The activity undertaken by respondent herein, who is a sub-agent of the IATA agent comes under „Air Travel Agents Services‟ or „Business Auxiliary Services‟. The ratio of the decision of the Hon‟ble High Court of Madras in the case of Airlines Agents Association (supra) would squarely apply to the facts of the present case. If the services rendered by the IATA agent is „Air Travel Agents Services‟, the services rendered by a sub-agent is also the same and it cannot be different from that if „Air Travel Agents Services‟. In fact, the case laws relied upon by the Revenue do not support the case of the Revenue at all. In the Sew Construction Ltd. case (supra), the issue for consideration was whether sub-contractor is liable to pay Service Tax for the services rendered to the contractor and it was held that sub-contractor is liable to pay Service Tax and the classification of the service rendered by the sub-contractor is not different and remains the same as services rendered by the contractor. Similarly, in the case of Vijay Sharma (supra), the question was whether broker or the sub-broker is liable to pay Service Tax. In that case it was held that sub-broker is liable to pay Service Tax under „Business Auxiliary Services‟. The same logic was followed in the case of Indfos Industries Ltd. (supra). From these decisions also, it is obvious that classification of the services rendered by the sub-broker or sub-agent remains the same as that of main broker.”

6. He further relied upon the decision of the Tribunal in the case of Amar Travels India v. Commissioner of Service Tax, Delhi - 2010 (10) TMI 505-CESTAT NEW DELHI wherein also the Tribunal has held that demand on service tax under the category of „business auxiliary service‟ cannot be sustained and the same was set aside. Further, he also submitted that the classification shall be preferred under the specific category rather than the general category. He also referred to the Circular issued by the Board vide Circular No. 59/8/2003-S.T., dated 20-6-2003 wherein it has been clarified that if there is specific category available, the service would be classified under the specific category and not under general category. He further submitted that the Commissioner has not given any finding on the applicability of the said circular which is binding on him.

7. On the other hand Learned Authorized Representative appearing for Revenue reiterates the findings of the lower adjudicating authority and submits 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‟.

8. After considering the submission of both the sides and perusing the appeals records and various judgments relied upon by the appellant, we find that the services rendered by the appellant in booking of passage for travel by air which is squarely covered by the definition of „air travel agency service‟ as defined under Section 65(105). As per the said definition of „Air Travel Agent‟ means -

„any person engaged in providing any service connected with the booking of passage for travel by air‟

and the taxable service means -

„any service provided or to be provided to any person by an air travel agent in relation to the booking of passage for travel by air‟.

9. In view of the statutory definition, any activity in relation to booking of passage 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).

11. By following the ratio of the above said decision we are of the considered view that the impugned order classifying the service under „business auxiliary service‟ is not sustainable in law and therefore we set aside the impugned order and allow the appeals of the appellant with consequential relief, if any.

10. Further, Larger Bench of the Tribunal in the case of Kafila Hospitality and the Travels Pvt. Ltd. (Supra), answering the references made to them observed as follows:

84. The inevitable conclusion, therefore, that follows from the above discussion is as follows :-

(i) the air travel agent is promoting its own business and is not promoting the business of the airlines;

(ii) the air travel agent is not promoting the business of the CRS Companies;

(iii) in any view of the matter, the classification of the service would fall under “air travel agent” service and not “BAS” in terms of the provisions of Section 65A of the Finance Act; and

(iv) the incentives paid for achieving the targets are not leviable to service tax

11. Coming to the issue of invocation of extended period, we find there is considerable force in the arguments of the Ld. counsel for the appellants; revenue did not bring about any evidence to allege suppression etc. with intent to evade payment of service tax; moreover, we find that when regular audits were conducted, revenue having raised the issue in subsequent audits, cannot take recourse to invoke extended period.

12. In view of the above, the inevitable conclusion one can draw is that the appellants are not rendering any “Business Auxiliary Service” to the other GSA/IATA operators and therefore the commission earned by them is not exigible to service tax as proposed in the show cause notice and confirmed in the impugned order. Therefore, the impugned order is not legally sustainable and is liable to be set aside. Accordingly, we allow the appeal, with consequential relief if any as per law.