Service Tax not leviable under BAS on Incentives Received from CRS Companies and Air Lines on Sale of Tickets: CESTAT [Read Order]

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that service tax not leviable under business auxiliary services (BAS) on incentives received from CRS companies and air lines on sale of tickets.

M/s. Modiline Travel Services Pvt. Ltd has assailed the orderpassed by the Commissioner (Appeals) in the appeal filed against the order passed by the Additional Commissioner. The Additional Commissioner had adjudicated the two show cause notices and confirmed the demands proposed in these two show cause notices with interest and penalty.

The issue is regarding the non-payment of service tax under BAS on the incentives received from the CRS Companies and Airlines on sale of tickets.

This issue has been decided in favour of the appellant by a Larger Bench of the Tribunal in Kafila Hospitality & Travels Pvt. Ltd. vs. Commissioner, Service Tax, Delhi. The Larger Bench held that by rendering services connected to travel by air, a travel agent would render ‘air travel agent’ services, which services cannot be said to be for ‘promotion or marketing’ for the airlines.

A Two-Member Bench of the Tribunal comprising Justice Dilip Gupta, President and Hemambika R Priya, Technical Member observed that “Thus, in view of the aforesaid decision of the Larger Bench of the Tribunal in Kafila Hospitality, service tax could not have been demanded from the appellant under BAS on the incentives that were received from CRS Companies and Air Lines on sale of tickets.”

To Read the full text of the Order CLICK HERE

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