In a major relief to M/s Kuoni Travel India, the New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that service tax is not leviable without identifying specific service provided and consideration received.
M/s Kuoni Travel India Private Ltd are engaged in providing services like “air travel agent” “rent-a-cab” “business auxiliary services” and “tour operators” and are registered with the service tax department. On the basis of audit conducted, by the officers of AG ( audit ), of the accounts of the appellants for the year 2006-07 and 2008-09, revenue entertained an opinion that the appellants received advances, on various counts, from their customers during these years and have not discharged the applicable service tax on the same.
The Counsel for the appellant submitted that the said advances from customers were amounts required to be adjusted towards outstanding liabilities of customers on account of i) cancellation of service ii) multi branch invoices iii) extension of discounts etc; they have explained to Adjudicating Authority that the nature of services rendered by the appellant did not warrant collection of advances and on the contrary in many cases credit was extended for recovery of the consideration.
It was also contended that to be exigible to service tax, any of the services listed under Section 66 should have been rendered and any amount received for the same, before, during or after provision of such service, shall be deemed to be the consideration; Revenue relied on Section 67(1)(i) without applying the rules in entirety.
The Authorised Representative for the Department submitted on the other hand that the appellant did not show any documentary evidence to substantiate their claim that the advances were not in respect of any service rendered and that the Chartered Accountant certificate submitted by the appellants does not indicate whether these recoveries are to be adjusted and if so when and against which account.
A Two-Member Bench comprising Justice Dilip Gupta, President and P Anjani Kumar, Technical Member observed that “We fail to understand as to how the Commissioner comes to the conclusion that this 10% of the income or advances shown in the books of accounts of the appellants leads to the inevitable conclusion that the amounts were for provision of certain services. We find that no specific service has been identified by the Adjudicating Authority, while accepting in principle that duty evasion cannot be proved with mathematical precision, the same cannot be established by applying a mathematical formula. We find that Courts and Tribunal have been consistently holding that service tax cannot be fastened without identifying the specific service provided and consideration received or to be received for the same.”
“We find that the Adjudicating Authority fails to understand that in demanding the service tax, the twin conditions i.e. identification of the particular service rendered and the payment received for such service, either before, during or after providing of such service, were to be satisfied. We find that Learned Commissioner has considered the appellant submission that 90% of their income is towards air travel agency service and that in provision of such service no advances were being taken” the Tribunal concluded.
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