Services of Planning Travel Itinerary of Clients Classifiable as Air Travel Agent: CESTAT quashes Service Tax demand

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) quashed service tax demand and held that the services of planning travel itinerary of clients classifiable as air travel agent. Show cause notice was issued by the Department for the period 2010-2014 and 2014-2015 respectively classifying the services rendered by the appellant under the category of “Business Support Services” and charging service tax amounting to Rs.2,97,58,677/- for the period 2010-2011 to 2013-2014 invoking the extended period of 5 years under Section 73(1) as the service provider had intentionally avoided the disclosure of the requisite details/documents while filing the Returns though they were under the statutory obligation of self-assessment to correctly assess their liability and pay the same within the time specified.

The counsel for the appellant raised preliminary objection that the entire demand under the show cause notice is barred by limitation as the show cause notices have been issued earlier in respect of the same issue and the Department was aware of similar facts under the proceedings. The appellant had filed online ST-3 Returns from time to time disclosing the value of the services and the rate on which the liability of service tax was discharged but no objection has been raised on them.

The submission of the appellant is that they have been discharging their service tax liability by opting to pay under the provisions of Rule 6(7) of the Service Tax Rules, 1994 which is fixed and therefore any consideration received over and above the taxable value of service prescribed under the rules cannot be subjected to service tax under different category.

The Authorised Representative for the Revenue reiterated the findings of the Adjudicating Authority and submitted that the extended period of limitation has been rightly invoked in the present case as it is a case of wilful suppression with intent to evade payment of service tax. On the cross appeal filed by the Revenue, the learned Authorised Representative submitted that the demand for the period 01.10.2010 to 31.03.2011 was within 5 years as the relevant date for filing periodical half-yearly return was 25.04.2011 and the show cause notice was issued on 13.04.2016 which is within 5 years.

A Two-Member Bench comprising Binu Tamta, Member ( Judicial ) and Hemambika R. Priya, Member ( Technical ) observed that “The fact that the appellant has been discharging service tax under Rule 6(7) implies that they are acting as “air travel agents” and hence no further liability arises. There is no doubt that the appellant is engaged in the travel agency business and has been charged service tax under “Air Travel Agent” service as defined in Section 65(4) read with section 65(105)(l).” “We are of the view that the appellant merely facilitates and assist the individuals who are travelling on which no service tax is leviable for the simple reason that service tax is charged on the service provided. The services in question does not fall within the scope of “Business Support Service” and therefore no service tax is leviable under the said category” the Bench noted

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