Case Law Details
Bird Travels P Ltd. Vs C.S.T- Delhi-IV (CESTAT Chandigarh)
Introduction: The case of Bird Travels P Ltd. vs. C.S.T- Delhi-IV was brought before the CESTAT Chandigarh, involving a dispute regarding the imposition of service tax on General Sales Agent (GSA) commissions received by the appellant from foreign airlines. The authorities claimed that these commissions should be taxed under the category of ‘Business Auxiliary Services.’
Detailed Analysis: Bird Travels P Ltd. is engaged in providing travel-related services to domestic and international travelers. They also act as General Sales Agents (GSA) for foreign airlines such as HANNAIR, S.N. Brussels, and Iceland Air. The dispute arose when the tax authorities argued that the GSA commissions received from these airlines should be subject to service tax under the category of ‘Business Auxiliary Services’ since Bird Travels promoted and marketed services provided by foreign airlines.
A show cause notice was issued on March 15, 2010, and after following due process, the original authority confirmed the demand for service tax, along with interest, and imposed penalties under Section 77 and Section 78 of the Finance Act, 1994.
Bird Travels P Ltd. contended that even if their services were considered Business Auxiliary Services, no service tax was payable because the beneficiaries of their services were foreign airlines that did not have offices in India. Furthermore, the payments they received as GSA commissions were in foreign exchange, thus qualifying their services as exports.
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