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TMI Blog2023 (11) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... the commission is normally paid by the airlines. 2. The appellant contends that since the volume of sale of tickets and collection of payments from number travel agents worldwide is a difficult task, all the airlines place the stock of their tickets with IATA through the Global Distribution System linked with IATA platform. IATA sells the tickets to its member travel agents, collects payment from them, makes payment to the airlines and issues a fortnightly statement titled as "Billing Settlement Plan BSP to its members specifying the following details:- (a) Cost of tickets purchased; (b) Charges levied by the airlines; (c) Fuel surcharge charged to cover price fluctuation of Aviation Turbine Fuel; (d) Rate of commission paid by the airlines and the amount on which commission is paid; (e) Amount payable to the airlines, after adjusting advance, if any; and (f) Balance advance. 3. The appellant also contends that the format used by IATA is universally applicable to all the member travel agents and the appellant or the other IATA members similarly placed do not have any say nor any control over the functioning of IATA or the manner in which it provides information to it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner are reproduced below: "15. At the very outset I find that the basic issues involved in the instant case are: Whether denial of option to pay service tax in terms of Rule 6(7) of the Rules, for nonpayment of service tax on gross value including Fuel surcharges on which commission has been pain to the assessee by the Airlines, is justified and if so whether demand of service tax at full applicable rate of service tax on total receipts of commission is sustainable under service tax law. Wrong availment of Cenvat Credit on the input service invoices issued at unregistered premises. xxxxxxxxx 16.5. I find from the records that the information required by the department had not been provided by the assessee. However, during the course of adjudication proceeding they have admitted sample copy of AITA BSP Agent Billing statement for the billing period 16.12.2008 to 31.12.2008 and on these basis has contended that IATA is giving commission on the amount of fare only an no commission has been paid to them on the amount of fuel surcharge. I have carefully gone through the sample documents submitted by the assessee claimed as commission statement of the AITA and find that thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manded the matter for a fresh decision with a further direction to the Commissioner to consider the documents produced by the appellant in support of the contention that it had paid service tax on that part of the air fare on which commission is normally paid by the airlines. The relevant portion of the order passed by the Tribunal is reproduced below: "7. xxxxxxxxxxxx. The word, "basic fare" is defined in the sub-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 term "basic fare" clearly indicates that the basic fare for the purpose of this sub-rule is not the gross fare but is the part of the gross airfare charged from the passengers on which the Airlines normally pay commission to the Air Travel Agent. The expression "air fare on which the commission is normally paid" means the portion of air fare, whether 100% or a lesser percentage, on which most of the Airlines pay the commission ignoring the stray cases in which commission is paid on a different part of air fare. The assessee's plea is that they have discharged service tax liability under Rule 6 (7), only on that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be included in the basic fare or not. ***** 4.5 ***** In context of the above, I observe that it is necessary to ascertain as to whether the assessee received commission on the basic fare which included fuel surcharge. The assesse has submitted copies of the IATA BSP summary statements for the period [months of October 2008, July 2009 and April 2010] as asked to them during the course of personal hearing on 04.01.2017 and it has been contended by them that the periodical commission statement of the IATA shows clearly the amount of fare, the amount of taxes on fare and the commission paid on fare and that it is clear from the said statements that IATA is giving commission on the amount of fare only and nowhere shows that the commissions has been paid to them on the amount of fuel surcharge. ***** 4.8 Now coming to the issue of ascertaining the correct taxable value in terms of the provision under Rule 6(7) of the Rules, I find that assessee has provided IATA BSP Summary for the months of October 2008, July 2009 and April 2010. From the BSP statements submitted by the assessee, it is seen that percentage of commission when calculated only on that part of fare whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... * 18. 16 to 30 90 9768620537 20.04.10 2020 3200 7.77 157 * 19. 1436494 589 9768620538 20.04.10 1900 1850 5.95 113 * -100402 April‟10 20. 90 9768620559 20.04.10 200 1600 27 54 * 21. 589 9768620560 20.04.10 2500 2700 6.24 156 * 22. 90 9768620561 20.04.10 550 1850 13.27 73 3 23. 1436494 16 to 30 90 9740800941 20.04.10 5420 0 3 163 * 24. -100402 April"10 90 9740800944 20.04.10 6520 0 3 196 * I find from the above tabulations based on the BSP statements submitted by the assessee that the rate of commission as shown under the column 'Rate' (Col no.9) shows huge variation; however it is uniform [3%] when the commission amount is calculated on the basis of Basic fare and fuel surcharge reflected in the individual ticket particulars. In a normal trade practice, the amount of commission is generally a fixed percentage and cannot vary from 3% to 788.89% during the course of fortnight and that too for the same Airline as being reflected in the IATA BSP statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant had paid commission on the air fare alone, or fuel surcharge was also included; (v) The Commissioner failed to appreciate the provision of rule 6(7) of the 1994 Rules; (vi) The BSP statement are followed worldwide uniformly and the air fare on which commission is paid, rate of commission and amount of commission is clearly mentioned in the BSP statement ticket wise; (vii) All transactions are carried out by the airlines through the Global Distribution System linked with IATA platform and the rates of tickets keep on changing frequently and, therefore, there are bound to be variations in both the air fare as well as the rate of commission; and (viii) The Commissioner committed an illegality in holding that the extended period of limitation was correctly invoked. 12. Dr. Radhe Tallo, learned authorized representative appearing for the department, however, supported the impugned order. 13. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 14. In order to appreciate the issue involved, it will be appropriate to reproduce rule 6(7) of the 1994 Rules as it stood a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y observed that the term "basic fare", in view of the definition contained in rule 6(7) of the 1994 Rules, is not the gross value including fuel surcharge, but is that part of the gross air fare on which the concerned airlines normally pays commission to the air travel agents. 17. To support the plea that the airlines were paying commission on the amount of air fare only and not on the amount of fuel surcharge plus air fare, the appellant had provided copies of the IATA BSP summary statements. After noting that the appellant had opted to discharge service tax liabililty under rule 6(7) of the 1994 Rules, the Commissioner examined the BSP statements submitted by the appellant. The Commissioner noticed that the percentage of commission when calculated only on air fare varied from ticket to ticket even in case of the same airline, but when the fuel surcharge was added to the air fare for calculating the commission, there was a fixed trend of rate of commission at the rate of 3 percent. The Commissioner, therefore, concluded that the airlines were paying commission to the air travel agents on the amount collected and shown as air fare and fuel surcharge and the contention of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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