Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

M/s Qatar Airways and M/s Emirates Versus Commissioner of Service Tax, Mumbai-I

2016 (8) TMI 89 - CESTAT MUMBAI

Import of services or not - booking facility of online air tickets through CRS companies - online information and data base access or retrieval service - CRS companies facilitated the sale of products or services, appellant herein as to seat inventory in a specific flight by using an online computer system provided by these foreign based companies which are used by Travel Agents. Appellant’s head offices entered into an agreement with the CRS companies for making payment to them on booking of ti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

office is taxable, but Hon’ble Member (Technical) held that such payment are not taxable as the Indian branch office cannot be treated as recipient of the service provided by the CRS companies under Section 66A of the Finance Act, 1994. The matter was referred to third Member. - It can be seen from the above reproduced majority order the issue is same as is in this case and is held in favour of the assessee. - Demand set aside - Decided in favor of assessee. - APPEAL NO. ST/86596, 88811 to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

passed by the Commissioner of Service Tax, Mumbai-I. 2. Since these appeals raise a common question of law, they are being disposed of by a common Order. The relevant facts that arises for consideration are appellant M/s Emirates is an international airlines having headquarter at Dubai and M/s Qatar Airways having headquarter at Doha. Both the appellants are having branch office located in India and operated airlines and have registration for discharge of Service Tax liability under the category .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

This CRS companies facilitated the sale of products or services, appellant herein as to seat inventory in a specific flight by using an online computer system provided by these foreign based companies which are used by Travel Agents. Appellant s head offices entered into an agreement with the CRS companies for making payment to them on booking of tickets. The CRS companies raised invoice on the appellants for the tickets booked, based upon such agreement and bills are settled by head office of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted the charges for the tickets from transport agents and remitted the same to head quarters, in Dubai and Doha. The Revenue authority have also come to a conclusion that the payment made to CRS companies by the head office of the appellants is taxable under the reverse charge mechanism under Section 66A of the Finance Act, 1994, in the hands of the branch office of the appellant. A show-cause notice was issued for demand of Service Tax liability, interest thereof and also proposing imposition o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

A. Rastogi, Advocate and Shri Anupam Dighe, Advocate appeared for the appellants and learned Special Counsel Shri V.K. Singh appeared for the Department. 4. Learned Sr. Advocate would submit that the service provided by CRS companies cannot be qualified as import of services as held by the adjudicating authority. It is his submission that the appellant have a branch office and does not access or receive data of CRS companies. He would further explain activity of CRS companies vis-a-vis travel a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sport agent about availability of the flight or seats for travelling at the date chosen by such passengers. He would draw our attention to the agreement entered into by the head office of the appellant with CRS companies. After pointing out the relevant clause, he would submit that it no way stipulates access or retrieval any data from the CRS companies to the appellant. It is also his submission that head office of the appellant settled the bills raised by such CRS companies for the issuance of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d in this case is now squarely settled by the majority decision of the Tribunal in the case of British Airways Vs. Commissioner of Central Excise (ADJN), Delhi - 2014 (36) STR 598 (Tri.- Del.). He would read the relevant paragraphs. 5. Learned Special Counsel after giving us the brief facts of the case submits that the agreement entered into by the head office of the appellant with CRS companies indicated that the CRS companies is meant to provide fully automated reservations and distribution sy .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e which is brought into Service Tax net w.e.f. 16.07.2001 as per Section 65(75) of the Finance Act, 1994. He would draw our attention to the definition of the said services. He would submit that as per provision of Section 66A(1) of the Finance Act, 1994, where any service is (a) provided or to be provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his permanent address or usual palace of residence in a coun .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

any office of accompany which is used for conducting business or from where some of the business of parent organization is carried out, as the establishment of parent organization. In the case in hand, appellants having an office in India is used for marketing of their business; hence it is a permanent establishment of appellant which would attract the provision of Section 66A. It is his submission that the argument that contract was entered by appellants head office situated in foreign country .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e CRS companies is appellant and not their foreign based head office. He would submit that Hon'ble Supreme Court in the case of All India Federation of Tax Practitioners - 2007(7) STR 625 (SC) has held that Service Tax is a VAT, which in turn is a destination based consumption tax in the sense that it is commercial activity and it is not a charge on the business but on the consumers and is leviable on only services provided within the country. He would also reliance placed on the decision of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the appellant, the payment made by the appellant herein as if no service had been provided by CRS companies to the appellant, there was no need to make such payment. He would try to differentiate facts of case in the case of British Airways (supra) on the ground that the service used by appellants in providing the service of air transport to passenger was not brought to the notice of Tribunal. He would submit that the question of limitation does not arise as this information was not provided to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in India and the main head office situated in Dubai and Doha. The dispute is as to whether the appellants, branch office of M/s Emirates, Dubai and M/s Qatar Airways, Doha is required to discharge Service Tax liability under Section 66A of the Finance Act, 1994, as contented by the Department, when the head office has made the payment for the services provided to CRS companies or otherwise. 9. We find that learned Sr. Advocate appearing on behalf of the appellant had correctly relied upon the ju .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o third Member, it would be very important here to record the findings of the Third Member as is recorded in paragraphs 42 to 53. We respectfully reproduce the same. 42. In the light of the above undisputed position, the legal issue which arises is as to whether British Airways, India has to be considered as an extension of British Airways UK or the same has to be treated as a separate legal entity in terms of the provisions of Section 66A(2). The provisions of Section 66A(2) are to the effect t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for the Revenue has strongly contended that British Airways, India cannot be treated as a separate legal entity in terms of the said provisions of Section 66A(2) inasmuch as British Airways, India cannot be held to be a permanent establishment of British Airways, UK. The same is only a branch office of British Airways, UK. My attention has been drawn to the various provisions of the Companies Act, 1956, which deal with the law relating to companies and their other associations. A company which .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

airs lays down that accounting standards should be followed by all companies whether incorporated in India or not. The accounting standard 17 relates to the Segment Reporting whereas Para 5.2 of the same tax arid geographical segments. The entire accounts from their Indian operations stand debited by the head office along with the expenses incurred by the corporate office in relation to operations in India and which includes the payment of CRS debit for tax sold in Indian ticketing. Further the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fice in India. As a consequence, of this facility provided to the foreign company for operating in India, by opening an office, the corporate office directly controls its office in India not as a holding company but as an office with administrative flow over of their operations including appointment of employees, control over expenses and obligation of evidence as long as that is not in conflict with Indian laws. As such, ld. DR submits that British Airways, UK and British Airways India is the s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e person, is the issue required to be decided. The British Airways, India has appointed IATA agents who issued and sold air tickets to the passengers, collected the air fare from them and remit the same to British Airways, India, after deducting their commission. The said earnings collected by British Airways, India are remitted to their head office in UK. 45. Going back to the provisions of Section 66A read with the explanation to sub-section (2) of the said Section, a person carrying on a busi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d sub-section further clarifies the scope of the expression Business Establishment . Though, the said explanation is to the effect that a person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country and does not expressly deals or explains that a person located outside India and carrying on a business through a branch in India shall be treated as having a business establishment in India but the reasonable construction .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

companies, as a separate person the service transacted between the head office outside India and their branch office in India would become tenable. Similarly, if the branch office receives any service from an outside India service provider, he will have to be treated as service recipient, being a separate person in view of the said Section 66A. 46. In view of the foregoing discussions, M/s. British Airways, India has to be treated as a separate person. If that be so, in view of the admitted posi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

osition of British Airways, UK having received the services, which stands provided by CRS companies located outside India and the consideration for which stands provided by British Airways, UK. The same stands consumed in UK only inasmuch as the server provided by CRS/GDS companies to IATA agents are connected between the two of them and such services are being utilised by the travel agents. 48. I also find myself in agreement with the observations and findings arrived at by ld. Member (Technica .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fice of British Airways, U.K. cannot be considered as a temporary establishment. The same is not for a particular project after the completion of which the same would get wound up. The same has been specifically permitted by RBI to carry on the air transportation activities and has to be held as a permanent establishment, in which case on account of the provisions of Section 66A, it has to be treated as a person separate from its head office. 50. It is also not the Revenue s case that British Ai .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y no stretch of imagination held to be service recipient in India so as to pay any Service Tax. 51. I also find favour with the appellant s contention that the entire situation is Revenue neutral. Admittedly British Airways, India is discharging its Service Tax liability in respect of air transportation tickets sold by them. The present demand confirmed against them, was admissible to them as Cenvat credit, which could have been further utilised for discharge of their Service Tax liabilities. I .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ould become relevant only once the demands stand raised subsequently on a disputed issue. Had they been paying the Service Tax during the relevant period, they would have been availing the credit of the same and utilising the same for discharge of admitted Service Tax liability, leading to Revenue neutral situation. The question of availability of credit in a subsequently raised confirmed demand would arise only at the time of finalisation of the demand itself. Reference in this regard can be ma .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

an alternative plea of availability of the demand as Cenvat credit to him leading to Revenue neutral situation. As such, even on this count, the appellant is bound to succeed. 52. I am also of the view that the demand, having been raised by invoking the longer period of limitation is hit by the provisions of Section 11A of the Act. My ld. Brother Shri D.N. Panda in his proposed order has held that inasmuch as the appellant was not registered under the Act and failed to file return periodically .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s are not registered and are not filing the returns. Coming to the bona fide belief of the assessee, there are number of factors which are required to be considered. The issue involved is a complicated issue of legal interpretation and cannot be held to be a settled law. The fact that there is difference of opinion between the two Members of the original Bench, itself establishes the fact that the legal issue is complex issue requiring legal expertise to settle the same. In such a scenario, if a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version