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.
In their defense, Bird Travels P Ltd. referred to their previous cases and rulings. They presented four appeals before the CESTAT, out of which three had already been disposed of by the Principal Bench of the CESTAT, Delhi. The Tribunal held that services provided as GSA to foreign airlines should be treated as exports. These airlines had no offices or establishments in India, and they paid consideration in convertible foreign currency. Therefore, Bird Travels P Ltd. was not liable to pay service tax under Business Auxiliary Services. The case referred to precedents and legal interpretations supporting this decision.
Notably, the department had also filed an appeal against this ruling in the Hon’ble Supreme Court, but their appeal was eventually dismissed.
Conclusion: The CESTAT Chandigarh upheld the arguments made by Bird Travels P Ltd., ruling that the GSA commissions they received from foreign airlines were not subject to service tax under Business Auxiliary Services. The decision aligned with previous rulings in favor of Bird Travels P Ltd., emphasizing that when services are rendered to foreign entities that do not have offices in India, and payment is received in foreign currency, such services qualify as exports and are not liable for service tax. This case reaffirms the importance of considering specific circumstances and applicable legal precedents in tax disputes.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The present appeal is directed against the impugned order dated 15.05.2013 passed by the Commissioner (Appeals) of Central Excise, Delhi-IV whereby the Ld. Commissioner (Appeals) has upheld the order-in-original and rejected the appeal.
2. Briefly the facts of the present case are that the appellant is engaged in the business of providing travel relating services to both domestic as well as international travellers. The appellant is also functioning as General Sales Agent (GSA) for Foreign Airlines, namely, HANNAIR, S.N. Brussels and Iceland Air and paying service tax in respect of booking made by the appellant as International Air Transport Association Agent (IATA). The Department entertained a view that the GSA Commission received from the said airlines is liable to service tax under the category of ‘Business Auxiliary Services’ as the appellant is promoting and marketing the services provided by the Foreign/International Airlines. On these allegations, the show cause notice dated 15.03.2010 was issued and after following due process, the original authority vide its order dated 21.07.2011 confirmed the demand alongwith interest and also imposed penalties both under Section 77 and 78 of the Finance Act, 1994. Aggrieved by the said order, the appellant filed appeal before the Ld. Commissioner (Appeals) who rejected the appeal of the appellant. Hence, the present appeal.
2. Ld. Consultant appearing on behalf of the appellant submits that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submitted that the appellant on the same issue for the earlier period and later periods, had filed four appeals including the present appeal before this Tribunal, the details of which are given herein below:-
