CRS/GDS Incentives Not Taxable, Fuel Surcharge Not Part of Basic Fare for Air Travel Agents: CESTAT allows Yatra Appeals [Read Order]
CESTAT held that CRS/GDS incentives to air travel agents are not taxable, fuel surcharge is not includible in “basic fare
![CRS/GDS Incentives Not Taxable, Fuel Surcharge Not Part of Basic Fare for Air Travel Agents: CESTAT allows Yatra Appeals [Read Order]](https://images.taxscan.in/h-upload/2026/04/04/2131961-cestat-allows-yatra-appealsjpg-1.webp "CRS/GDS Incentives Not Taxable, Fuel Surcharge Not Part of Basic Fare for Air Travel Agents: CESTAT allows Yatra Appeals [Read Order]")
The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that CRS/GDS incentives received by air travel agents are not taxable and that fuel surcharge cannot be included in the basic fare for the purpose of service tax. Yatra Online Pvt. Ltd. and TSI Yatra Pvt. Ltd., the appellants, were engaged in booking air tickets through CRS/GDS platforms...
The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that CRS/GDS incentives received by air travel agents are not taxable and that fuel surcharge cannot be included in the basic fare for the purpose of service tax.
Yatra Online Pvt. Ltd. and TSI Yatra Pvt. Ltd., the appellants, were engaged in booking air tickets through CRS/GDS platforms which provided incentives based on usage. The department issued show cause notices alleging that such incentives are taxable and that fuel surcharge should be included in the basic fare for computation of service tax under Rule 6(7).
The appellants challenged the demands before the Tribunal.
The appellants’ counsel argued that CRS/GDS incentives are not consideration for any service and relied on the Larger Bench decision in Kafila Hospitality. It was argued that fuel surcharge is not part of the basic fare under Rule 6(7) and cannot be included for taxation purposes.
The revenue argued that incentives received from CRS/GDS companies are taxable as consideration for promoting their business. It was also argued that fuel surcharge forms part of the fare when commission is earned on it and should be included in the taxable value.
The two-member bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) observed that the issue of taxability of CRS/GDS incentives is settled by the Larger Bench decision which held that such incentives are not taxable as they are not consideration for any service. The tribunal also observed that fuel surcharge cannot be included in the basic fare once the assessee opts for taxation under Rule 6(7).
The tribunal held that the demands raised on these issues are not sustainable in law. The tribunal set aside the impugned orders on these issues and allowed the appeals.
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