Incentive or Commission Received by Travel Agency from Amadeus India not liable to Tax u/s 65(19) of Finance Act: CESTAT [Read Order]

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the incentive or commission received by the Travel Agency from Amadeus India not liable to tax under Section 65(19) of the Finance Act, 1994.

Two show cause notices were issued to the appellant, M/s. Nitco World Travels, which were adjudicated and it was held that the incentive/commission received by the appellant from M/s. Amadeus India Pvt.Ltd. qualify as business auxiliary service under section 65(19) of the Finance Act, 1994 and they are liable to pay service tax. Accordingly, the demand of service tax was confirmed along with interest and penalties were also imposed. Against the said orders, the appellant is before the Tribunal.

The issue to be decided is that whether the incentive/commission received by the appellant for using CRS developer is subject to service tax or not.

The Counsel who appeared on behalf of the appellant submitted that the issue is no more res integra in the light of the Larger Bench decision in the case of Kafila Hospitality & Travels Pvt.Ltd. vs. Commr. of S.T., Delhi, which was followed by this Tribunal in the case of Asveen Air Travels (P) Ltd. vs. Commissioner of GST & Central Excise, Chennai. Therefore, the impugned orders are to be set aside.

In Kafila Hospitality & Travels Pvt.Ltd, it was held that the air travel agent is, by sale of airlines ticket, ensuring the promotion of its own business even though this may lead to incidental promotion of the business of the airlines/CRS Companies. Thus, in terms of the provision of Section 65A(2)(a) of the Finance Act, the classification of the service would fall under “air travel agent” services and not Business Auxiliary Services (BAS).

A Two-Member Bench comprising Ashok Jindal, Judicial Member and K Anpazhakan, Technical Member observed that “The incentive or commission received by the appellant from M/s. Amadeus India Pvt.Ltd. is not liable to tax, in terms of section 65(19) of the Finance Act, 1994. Therefore, we set aside the impugned orders and allow the appeals with consequential relief, if any.”

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