TMI Blog2024 (1) TMI 1119X X X X Extracts X X X X X X X X Extracts X X X X ..... ding Business Auxiliary Service deserves to be rejected in view of the law settled by the Larger Bench in Kafila Hospitality Travels Pvt. Ltd. [ 2021 (3) TMI 773 - CESTAT NEW DELHI (LB)] where the Tribunal considered the issue as to whether the amounts received by the appellant as incentives were towards promotion of their business and not the business of the airlines so as to be taxable under the category of Business Auxiliary Service . Reference was made by the Larger Bench to the decision in Airlines Agents Association vs Union of India [ 2001 (4) TMI 9 - HIGH COURT OF JUDICATURE (MADRAS)] , where the Madras High Court held that the commission paid to the Air Travel agents had a direct nexus to the air travel agent services rendered to the passengers even if it indirectly benefited the business of the airlines. It was, therefore, concluded that air travel agent were not promoting or marketing the business of the airlines. Similarly, in the case of Commissioner of Central Excise versus Shabeer Travels [ 2010 (3) TMI 818 - KERALA HIGH COURT] , the Kerala High Court rejected the contention of the department that the subagent was rendering BAS to IATA agent and held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the branch to the appellant - The said issue has also been considered in Riya Travel Tours (I) Pvt. Ltd. [ 2018 (11) TMI 1804 - CESTAT MUMBAI] , where the Tribunal held that the commission received by the head office from the branch office of the same entity is not taxable as both cannot be treated as separate entity. The demand raised by the revenue under the category of Business Auxiliary Service is unsustainable - the impugned order is set aside - appeal is allowed. - MS. BINU TAMTA, MEMBER (JUDICIAL) AND MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Shri Manoj Chouhan, Chartered Accountant for the appellant Shri Manoj Kumar , Authorised Representative for the respondent ORDER The appellant is assailing the Order-in-Appeal No.176(SM)ST/JPR/2018 dated 13.03.2018, whereby the Commissioner (Appeals) confirmed the demand towards service tax as proposed in the show cause notice and affirmed by the Adjudicating Authority. 2. The appellant is engaged in providing Air Travel Agent Service and are holding the service tax registration. The appellant was discharging the service tax under Rule 6(7) of Service Tax Rules, 1994 and were paying service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; or [ Explanation . For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, inputs means all goods or services intended for use by the client;] (v) production or processing of goods for, or on behalf of the client; or (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, [but does not include any activity that amounts to manufacture of excisable goods.] Section 65(105)(zzb) Taxable Service means any service provided or to be provided to a client, by any person i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the airlines so as to be taxable under the category of Business Auxiliary Service . The observations of the Tribunal are as under: - 55. For an activity to be considered as promotional, it is necessary that a service provider must promote or endorse the service of the client. It has, therefore, to be seen whether in the present case the travel agent is encouraging a passenger to purchase a ticket of a particular airline. The facts reveal that the travel agent is only providing options to the passenger and it the passenger who determines the airline for travel. It is only when the target of having achieved the pre-determined number of bookings is achieved that the airline pays an incentive to the travel agent. It cannot, therefore be said that the travel agent is promoting the service of any airlines. Incidentally, the airlines may benefit if more tickets are sold, but his would not mean that the travel agent is providing a service for promoting the airlines. 8. Reference was made by the Larger Bench to the decision in Airlines Agents Association vs Union of India - 2006 (3) STR 3, where the Madras High Court held that the commission paid to the Air Travel agents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Thus having considered the decision of the Larger Bench at length we are of the considered view that no service tax can be levied on the appellant under the category of Business Auxiliary Service . We may also refer to the later decision of the Tribunal in SOTC Travels Services Pvt. Ltd vs Principal Commissioner, Central Excise Delhi - 2022(7) TMI 293- CESTAT NEW DELHI where once again the liability to pay service tax under the heading Business Auxiliary Service on receipt of commission or incentive from CRS companies and on performance linked bonus from the airlines was decided against the revenue following the decision of the Larger Bench in Kafila Hospitality (supra) and the appeal filed by the revenue was dismissed by the Apex Court 2023 (7) TMI 439 (SC) observing as : After hearing the learned Additional Solicitor General, appearing on behalf of the appellant and noticing his statement that the relied upon judgement in Kafila Hospitality Travels Pvt Ltd versus Commissioner, Service Tax, Delhi has not been challenged, we see no merit in appeal. Hence, the civil appeal will stand dismissed . 10. The Revenue having not challenged the order of the Larger Bench h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iary Service was held to be unsustainable. Following the said orders, we are of the considered opinion that demand raised by the revenue in this regard under the category of Business Auxiliary Service deserves to be rejected. 14. Lastly, with regard to the demand pertaining to the commission received from their own branches, we agree with the contention of the learned counsel for the appellant that though the appellant and the branches are having separate service tax registration numbers but they are one and the same person and the transaction does not involve two separate entities. The branch has been set up for serving the appellant companies customers in and around Jaipur and the commission received by Jaipur office from other branch office is not for any taxable services rendered. The said commission is not received from any other person but by the appellant himself, which in essence is only on account of transfer of tickets from the branch to the appellant. The said issue has also been considered in Riya Travel Tours (I) Pvt. Ltd. 2020 (40) GSTL 321, where the Tribunal held that the commission received by the head office from the branch office of the same entity is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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