The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no service tax under Business Auxiliary services (BAS) is leviable on General Sales Agent (GSA) received from airlines on promoting and marketing services by the foreign airlines.
The appellant, Bird Travels P Ltd was engaged in the business of providing travel relating services to both domestic as well as international travellers. The appellant was also functioning as General Sales Agent (GSA) for Foreign Airlines, namely, HAHN AIR, S.N. Brussels and Iceland Air and paying service tax in respect of booking made by the appellant as International Air Transport Association Agent (IATA).
The Department entertained a view that the GSA Commission received from the said airlines is liable to service tax under the category of ‘Business Auxiliary Services’ as the appellant was promoting and marketing the services provided by the Foreign/International Airlines. On these allegations, the show cause notice dated 15.03.2010 was issued and after following due process, the original authority vide its order dated 21.07.2011 confirmed the demand along with interest and also imposed penalties both under Section 77 and 78 of the Finance Act, 1994.
J. M. Sharma, on behalf of the assessee submitted that the impugned order was not sustainable in law as the same had been passed without properly appreciating the facts and the law. He further submitted that the appellant on the same issue for the earlier period and later periods, had filed four appeals and the department had also filed Appeal against the Order of Commissioner with a prayer that the extended period of limitation as per section 73(1) of Finance Act, 1994 may be invoked and penalty under Section 78 of the Customs Act may be imposed but the Tribunal dismissed the Department’s Appeal
He further submitted that even if it was accepted that the appellant provided Business Auxiliary Service, the service tax was not payable as the beneficiaries of the services provided by the appellant were Foreign Airlines who had no offices in India and the payment of the GSA commission was received in foreign exchange. Hence, the services rendered by the appellant would amount to export of services.
Raman Mittal, appearing for the Respondent reiterated the findings in the impugned order.
Single Bench of S. S. Garg, Member (Judicial) observed the Tribunal’s decision in 4 appeals and by following the ratio of the said decision in the appellant’s own case, allowed the appeal of the appellant on the same terms.
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