Commissions Paid by Indian Railways Before 1 October 2012 Not Subject to Service Tax: CESTAT Quashes Order [Read Order]
The tribunal observed that the earlier order of the Commissioner (Appeals), which upheld service tax liability, wrongly made this distinction. Referring to its previous decision dated 8 December 2015, CESTAT allowed the appeal and quashed the impugned order
The Delhi Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that commissions paid by Indian Railways to overseas agents for selling Indrail passes before 1 October 2012 were not subject to service tax.
Indian Northern Railways, appellant-assessee, disputed the service tax on commissions paid to overseas agents for selling Indrail passes to foreign tourists. Show cause notices were issued for the period 1 April 2010 to 31 March 2011.
The Adjudicating Authority dropped the proceedings, citing Section 99 of the Finance Act, 2013-14, which exempted services provided before 1 October 2012. Revenue appealed to the Commissioner (Appeals) against the exemption for the period 1 April 2010 to 30 June 2012. The Commissioner (Appeals), in an order dated 30 January 2018, ruled in favour of Revenue, prompting the present appeal.
The assessee counsel, argued that the impugned order contradicted the Tribunal’s earlier decision dated 8 December 2015 for the period 2005-06 to 2009-10. He contended that the Commissioner (Appeals) wrongly distinguished between services rendered by the Railways and services received under the Reverse Charge Mechanism (RCM). He submitted that the issue was settled by precedent and the appeal should be allowed.
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The authorised representative for the revenue, supported the findings of the impugned order.
The two member bench comprising P.Dinesha (Judicial Member) and P.Anjani Kumar (Technical Member) reviewed the case records and found that the Commissioner (Appeals) had wrongly tried to differentiate between services provided by the Railways and services received under the RCM.
It noted that Section 99 of the Finance Act, 2013, exempted service tax on services provided by Indian Railways before 1 October 2012, without making any distinction between services rendered or received.
The appellate tribunal observed that under RCM, the service recipient is deemed to have provided the service, making such a distinction invalid. Referring to its earlier Final Order No. 53814/2015 dated 8 December 2015, the tribunal confirmed that services provided by the Railways before 1 October 2012 were not taxable.
Accordingly, the tribunal allowed the appeal and quashed the impugned order.
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