No Service Tax on Incentive received by Air Travel Agent for using CRS Developer: CESTAT

Service Tax - Air Travel Agent - CRS Developer - CESTAT - Taxscan

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai bench has held that service tax is not leviable on the amount of incentive received by an Air Travel Agent for using CRS developer under the provisions of Finance Act, 1994.

The appellant, M/s. Asveen Air Travels (P) Ltd, is engaged in providing service under the category of ‘Air Travel Agency Service’ and are paying service tax on the commission received from the airlines. During the course of investigation conducted by the Service Tax Department, it was found that the appellant had received incentives/ commission from CRS Developers (Centralized Reservation System) namely M/s. Galileo India Pvt. Ltd., M/s. Abacus Distribution System (India) Pvt. Ltd., M/s. Amadeus India Pvt. Ltd. for booking of tickets through thecomputerized reservation booking system offered by the said companies. The department was of the view that the said incentive received is subject to service tax under the category of ‘business auxiliary service’.

Ms. SulekhaBeevi C.S., Member (Judicial) and Shri Raju, Member (Technical) observed that the issue that whether the incentive received by the appellant for using the CRS Developer is subject to service tax or not, has already been considered bythe Larger Bench in the case of Kafila Hospitality and Travels Pvt. Ltd. wherein it was held that the said incentive is not subject to levy of service tax.

In the above case, the Tribunal held that the classification of the service would fall under “air travel agent” service and not “BAS” in terms of the provisions of Section 65A of the Finance Act; and (iv) the incentives paid for achieving the targets are not leviable to service tax.

Quashing the order, the Tribunal held that “Following the said decision, we are of the considered opinion that the demand cannot sustain and requires to be set aside, which wehereby do. In the result, the impugned order is set aside. The appeal is allowed with consequential relief, if any.”

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Asveen Air Travels (P) Ltd. vs Commissioner of GST & Central Excise

Counsel for Appellant:   Ms. Radhika Chandrasekar

Counsel for Respondent:   Shri Arul C. Durairaj