2025 (5) TMI 404

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... s a sub-agent of M/s New Globe and has been booking cargo on international airlines for carriage to foreign destinations. M/s New Globe gets commission on the freight amount and pays service tax thereon. The appellant is also getting commission from M/s New Globe and paying service tax. IATA agents also gets incentives/discounts from bulk cargo depending upon the weight/volume/density of the cargo occupying lesser space in the aircraft. M/s New Glob also share part of the incentive/discount to the appellant. On the basis of the audit in the year 2011 for the period 2006-07 to 2009-10, the Department was of the view that the appellant was liable to pay service tax on the amount of incentive/discount received from M/s New Globe. Show cause no .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... alf of the client. Thus, if the appellants were selling the space on carrier from the airline directly to the exporters without themselves purchasing the space then it could have been considered as an activity involving promotion of sales. In the instant case the appellant are directly buying themselves and thereafter selling the same to the exporters. In this activity they are receiving incentive and commission based on the total space purchased by them from the airline. This activities can by no stretch of imagination be considered as BAS as for any service to statute the BAS atleast three parties should be involved in the transaction namely the service provider, service recipient and the client. In the instant case there are only two par .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... unt of rendering any services but on account of trading activity which is not taxable under the Act. Section 66 which is the charging section provides for levy of tax at the rate of 12% on the value of taxable services referred on therein. Therefore, what is relevant for levy of service tax is the rendering of services. The Larger Bench in Kafila Hospitality, (supra) dealt with the issue whether the incentives paid by the airlines to the travel agents or sub agents for achieving targets was for promoting and marketing the business of the airlines and were liable to service tax under the category of BAS and concluded that under Section 67 of the Act Service tax is leviable on 'consideration and incentives cannot be construed as considera .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X