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2017 (8) TMI 836 - AT - Service TaxAir Travel Agent Services - non-payment of service tax - The appellant did not discharge service tax for the period October 2003 to September 2005 and alleging that appellants cannot discharge service tax on the basic fare but have to pay on the commission received, show cause notice dated 4.10.2006 was issued - Held that: - As per rule 6(7) of Service Tax Rules, 1994, the appellant has an option to pay service tax on that part of the basic fare method instead of discharging service tax on the rate applicable for the commission received. There is no procedure contemplated in the provision to intimate the department regarding the option exercised. The main reason for disallowing such option to pay service tax on the basic fare, as revealed from the impugned order, is that the appellant has not intimated the department with regard to the exercise of option. When no procedure is contemplated for such intimation, the option exercised by the appellant which is revealed from the service tax returns filed by them cannot be denied. The conduct of the appellant in filing ST-3 returns by calculating the service tax on the basic fare method in terms of the option available to them under Rule 6(7) is sufficient exercise of option. The department cannot force upon the appellant to pay service tax on the basis of commission received when the rules itself provide an option to the appellant / assessee. Penalties - Held that: - it is clear that there was much dispute and confusion as to whether the discharge of service tax on the basis of basic fare method is sufficient and proper, and the department has not been allowing the appellant to exercise the option which the law provides to them. It is also brought out that there was denial of right to exercise option by the department by which the appellant was put to much difficulties. On such score, the penalties imposed are unwarranted and the same are set aside. The adjudicating authority directed to ascertain the demand in terms of basic fare method - appeal allowed in part and part matter on remand.
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