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TMI Blog2020 (3) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of interest and penalty. 2. The appellant is engaged in the business of booking of tickets by air and is registered under the category of air travel agent. It filed ST-3 returns. For the period 2007-2008 to 2011-2012 it opted to make payment of service tax on an amount calculated @0.6% of the basic fare in case of domestic booking and @1.20% of the basic fare in case of international bookings of passage for travel by air during any calendar month or year. The Appellant has stated that the total number of airlines for which the appellant booked tickets is 73, but as some of the airlines are small, no bookings took place in particular months. It has also been stated that the method of payment of commission to the agents varies from airline to airline. Some of the airlines do not make payment of commission, but permit making recovery of transaction charges. Some of the airlines pay commission on the basic fare and some of the airlines pay commission on basic fare plus fuel surcharge, for which the code name is YQ. The appellant claims that the total fare recovered from the customers by an agent is normally broken up in the ticket in components like :- (i) Basic fare ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "basic fare", since it is normally not paid to the air travel agent by the airline ; (ii) This was specifically stated by the appellant in reply to the show cause notice, but the Principal Commissioner failed to advert to this issue in the impugned order ; (iii) Even the method adopted by the Principal Commissioner for computing the taxable income under section 72 of the Act is not correct and even otherwise no opportunity was provided by the Principal Commissioner to the appellant to make any submission on the said method adopted by the Principal Commissioner. If opportunity had been given to the appellant, it could have satisfied the Principal Commissioner that commission is not received on international bookings, but the Principal Commissioner has accounted the average commission as 3% of domestic as well as international bookings ; (iv) The Principal Commissioner committed an error in denying the benefit of Cenvat credit ; and (v) The demand on other incomes has also been confirmed without any discussion. The appellant, however, is not pressing the demand on incentive to abacus since only a meager amount of Rs. 12,500/- has been demanded on this. 7. The learned A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance upon the decision of the Division Bench of this Tribunal in Kafila Hospitality and Travels Ltd. versus Commissioner of Service Tax, Delhi. 2015 (38) S.T.R. 184 (Tri. - Del.). 11. It is a fact that though a defence was taken by the appellant in reply to the show cause notice that the commission received on fuel surcharge could not have been subjected to levy of service tax under rule 6 (7) of the Rules, but there is no discussion of this issue in the impugned order. 12. In Kafila Hospitality & Travels Ltd., Explanation to rule 6 (7) came up for interpretation before the Tribunal and the observations are as follows :- "7. The appellant as IATA Agent have two options to discharge Service Tax liability. The first option is to pay Service Tax on the gross amount of commission received. However, Rule 6(7) provides another option to them to pay Service Tax @ 0.6% of the basic fare in respect of domestic bookings and @1.2% of the basic fare in respect of the international booking. The [term], "basic fare" is defined in the Rule as the part of the airfare on which the commission is normally paid to the Air Travel Agent by the Airlines. The explanation to Rule 6(7) defining the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of their plea that they have paid Service Tax on that part of the airfare on which the commission is normally paid by the Airlines. The appeal, stay application as well as misc. application stand disposed of as above". 13. The appellant contends that out of the seventy three airlines only four airlines pay commission on fuel surcharge and, therefore, it cannot be said that commission is normally paid to the air travel agent by the airlines on fuel surcharge. It was, therefore, obligatory on the part of the Principal Commissioner to have considered this issue raised by the appellant in response to the show cause notice, but that has not been done. The matter, therefore, has to be remitted to the Principal Commissioner to decide this issue. It shall be open to the parties to place additional evidence, if so required, before the Principal Commissioner for a proper determination of this issue. 14. It is only when this issue is decided against the appellant, that would be necessary for the Principal Commissioner to take recourse to the provisions of section 72 of the Act for determination of the taxable value. This issue again would have to be decided by the Principal Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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