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2024 (3) TMI 596 - AT - Service TaxLevy of service tax - Business Auxiliary Service - incentives received from the airline companies - Department has filed the cross appeal on the bifurcation of the income under the category as ‘Commission’ and ‘Incentive’ and further the bifurcation of incentives to ‘incentive’, ‘discount’ and ‘market price adjustments’ on which demand has been dropped. HELD THAT:- The amount received as ‘Commission’ is distinguishable from the amount received as ‘Incentive’ for the simple reason that ‘Commission’ has direct nexus to the service which the appellant is providing, i.e. booking of space with the airlines whereas ‘Incentive’ as explained by the appellant is the profit which they earn from the difference in the amount which they generally charge from their clients which is higher than the price they have negotiated with the airlines. Therefore, the amount received by way of incentive is not on account of rendering any services but on account of trading activity which is not taxable under the Act - The findings of the adjudicating authority that ‘incentive’ received by the appellant is also another form of ‘consideration’ given by the airlines for providing the service for promotion of their business needs to be set aside in view of the decision of the Larger Bench, where it was specifically concluded that by booking air tickets the air travel agent is promoting its own business and is not promoting the business of the airlines. The terms ‘incentive’, ‘discount’ or ‘market price adjustment’ used in the CSR has been considered differently by the adjudicating authority which has been challenged both by the assessee as well as by the revenue. No service tax can be levied on ‘incentive’. In so far as the appeal filed by the revenue against the demand being dropped on ‘discount’ and ‘market price adjustment’ is concerned the same has been dropped as they are directly linked to freight which has been held to be non-taxable by the adjudicating authority and the same has not been challenged by the Revenue. The learned Authorized Representative has relied on the decision in M/S. APL LOGISTICS INDIA (PVT) LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [2018 (2) TMI 317 - CESTAT CHENNAI] however there are no relevance of the same in the present context, though the Tribunal observed that there was no merit in the Revenue’s case that the appellant has provided Business Auxillary Service. The impugned order set aside - appeal of Revenue dismissed.
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