No Service Tax to be levied on incentives received by CRS companies: CESTAT [Read Order]
The bench held that no service tax is leviable on the CRS incentive
![No Service Tax to be levied on incentives received by CRS companies: CESTAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2024/11/No-Service-Tax-levied-incentives-CRS-companies-CESTAT-taxscan.jpg "No Service Tax to be levied on incentives received by CRS companies: CESTAT [Read Order]")
In a recent ruling, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that no service tax is leviable on the CRS incentives received by the appellant. The appellant had filed two separate appeals challenging the Order-in-Appeal,dated 30.09.2016, which confirmed the service tax demand along with interest and penalties. In this case,...
In a recent ruling, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that no service tax is leviable on the CRS incentives received by the appellant.
The appellant had filed two separate appeals challenging the Order-in-Appeal,dated 30.09.2016, which confirmed the service tax demand along with interest and penalties.
In this case, the appellant, New High Flying Travels Pvt. Ltd., is engaged in providing taxable services in relation to travel and tours and is registered under the categories of ‘tour operator service’, ‘air travel agent service’, and ‘business auxiliary service’.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
Under the business auxiliary service ( BAS ) rendered by the appellant, the appellant receives computer reservation system ( CRS ) incentives for booking air tickets using Galileo/Amadeus systems and organizes outbound tours for Indian tourists visiting international destinations.
One of the main issues here is whether service tax is leviable on the CRS incentive.
The bench relied on the case of Kafila Hospitality & Travels Pvt. Ltd. v. Commissioner of Service Tax, Delhi, which was decided by a larger bench, in which the larger bench of CESTAT held that the mere selection or use of software does not constitute a promotional activity as the department has not identified any actions by the air travel agent that promote the CRS company's business. Thus, incentives received from a service provider should not be subject to service tax.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The CESTAT bench, comprising Binnu Tamta ( Judicial Member ) and Hemambika R Priya ( Technical member ), relying on the above decision, held that no service tax can be levied on the appellant on account of incentives received from the CRS companies.
The bench modified the impugned order.
Mr. S. K. Wadhwa was the learned counsel for the appellant, and Mr. S. K. Meena was the authorized representative for the Revenue.
To Read the full text of the Order CLICK HERE
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