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clients, which services include booking of air tickets, travel planning and itinerary management for domestic and international travel, assistance in procuring Foreign Exchange from authorised money changers, and assistance in filling up the application form for obtaining visa, and receives consideration for the same.

3 . The travel agents can discharge service tax liability by opting either of the two options provided:-

(i) At the full rate of service tax on commission received; or

(ii) At the value and rates prescribed under rule 6(7) of the Service Tax Rules, 1994².

4 . This position continues even after introduction of negative list regime on 01.07.2012. The appellant opted to discharge the service tax liability provided under rule 6(7) of the 1994 Rules.

5. The department issued a show cause notice dated 21.10.2013 to the appellant proposing to raise a demand of service tax of Rs. 19,37,278/- on the incentives received. It also proposed to deny CENVAT credit of Rs. 7,13,481/- availed on the strength of invoices issued by Himani Modi. Penalties on the appellant under sections 76, 77 and 78 of the Finance Act 1994³and interest under section 75 of the Finance Act and rule 14 of the CENVAT Credit Rules, 2004⁴were also proposed.

6. The appellant filed a detailed reply dated 02.05.2014 to the show cause notice and denied the allegations.

7. The department issued a second show cause notice dated 19.05.2014 to the appellant proposing to raise a demand of service tax of Rs. 6,42,169/- on the incentives received from Airlines, visa

2. 1994 Rules

3. the Finance Act

4. the CENVAT Rules

3

consultation, medi-claim, Foreign Exchange transaction and miscellaneous receipts for the year 2012-13.

8. The appellant filed a detailed reply to the show cause notice and denied the allegations.

9. The Additional Commissioner, by order dated 15.06.2016, confirmed the demand proposed in the two show cause notices with interest and penalty and the appeal filed by the appellant before the Commissioner (Appeals) has been dismissed by the Commissioner (Appeals) by order dated 28.11.2016.

10. The following six issues arise for consideration in this appeal:

(i) Non-payment of service tax under the category of 'business auxiliary service' ⁵

on the incentives received from the Central Reservation System Companies⁶ and Airlines on the sale of tickets;

(ii) Non-payment of service tax under the category BAS on the service charges received by the appellant from clients for visa consultation;

(iii) Non-payment of service tax under the category BAS on the incentives received from medi-claim insurance companies;

(iv) Non-payment of service tax under the category BAS on the incentives received from Foreign Exchange brokers;

(v) Non-payment of service tax under the category BAS on the incentives received from Miscellaneous Receipts; and

5. BAS

6. CRS Companies

4

(vi) Denial of CENVAT credit on the ground that invoices bear address as 1400, Modi Tower, 98, Nehru Place, New Delhi.

11. Ms. Madhumita Singh, learned counsel made submissions on behalf of the appellant and Shri Harshvadhan learned authorised representative made submissions on behalf of the department.

First Issue

12. The issue is regarding the non-payment of service tax under BAS on the incentives received from the CRS Companies and Airlines on sale of tickets.

13. This issue has been decided in favour of the appellant by a Larger Bench of the Tribunal in Kafila Hospitality & Travels Pvt. Ltd. vs. Commissioner, Service Tax, Delhi⁷. The Larger Bench held that by rendering services connected to travel by air, a travel agent would render 'air travel agent' services, which services cannot be said to be for 'promotion or marketing' for the airlines.

14. The Larger Bench also examined whether the air travel agent is promoting the business of CRS Companies and it was observed:

"60. It is seen that the CRS commission is paid to a travel agent if he is able to attain an agreed level of segments to be booked. A passenger is not aware of the CRS Company being utilized by the travel agent for booking the segment nor can a passenger influence a travel agent to avail the services of a particular CRS Company. What is important to notice is that for an activity to qualify as "promotional", the person before whom the promotional activity is undertaken should be able to use the services. The passenger cannot directly use the CRS software provided by the Company to book an airline ticket. It cannot, therefore, be said that a

7. 2021 (47) G.S.T.L. 140 (Tri.-LB)

5

travel agent is promoting any activity before the passenger.

61. The matter can be examined from another aspect. For booking a ticket, a travel agent would require a system to book the tickets. A travel agent is free to choose any CRS system. A passenger would never request a travel agent to book his ticket only through Amadeus/Galileo/Abacus system. Can it, therefore, be said that the travel agent is engaged in the promotion of a particular CRS system. xxxxxxxxxxx

65. Mere selection of software or exercising of a choice would not result in any promotional activity. The Department has not pointed out at any 'activity' undertaken by an air travel agent that promotes the business of the CRS Company.

66. The Department has also contended that in the present case, the demand under BAS is justified as three parties are identifiable, namely, the CRS Company, travel agent and a passenger.

67. The passenger cannot be deemed to be an audience for promotion of the business of CRS Companies, for the passenger can neither book directly through a CRS Company nor can a passenger be influenced by any travel agent to book through a particular CRS Company.

xxxxxxxxxx

70. The two competing entries are "air travel agent"

service and "BAS". It would be seen from the definition of "air travel agent" that it includes all services connected with or in relation to the booking of passage for travel by air. The services in question are booking of airlines tickets and for achieving a pre-determined target, the air travel agent also receives an additional amount in the form of incentives/commission from the airlines or the CRS Companies. The receipt of incentives commission would not change the nature of the services rendered by the travel agent.

71. This apart, the definition of BAS would also reveal that the service provider must promote or market the service of a client. As noticed above, it is

6

not a case where the air travel agent is promoting the service of airlines/CRS Companies. The air travel agent is, by sale of airlines ticket, ensuring the promotion of its own business even though this may lead to incidental promotion of the business of the airlines/CRS Companies. Thus, in terms of the provision of section 65A (2)(a) of the Finance Act, the classification of the service would fall under "air travel agent" services and not BAS."

15. The Larger Bench also examined whether incentives paid for achieving targets are taxable and it was observed:

"80. It, therefore, clearly transpires from the aforesaid decisions that incentives paid for achieving targets cannot termed as "consideration" and, therefore, are not levaible to service tax under section 67 of the Finance Act."

16. Thus, in view of the aforesaid decision of the Larger Bench of the Tribunal in Kafila Hospitality, service tax could not have been demanded from the appellant under BAS on the incentives that were received from CRS Companies and Air Lines on sale of tickets.

Second Issue

17. This issue is regarding non-payment of service tax under BAS on the service charges received by the appellant from clients for visa consultation. The appellant assists the travellers in filling up the application forms for obtaining VISA. The assistance involves help in preparation of the documents, filing up details and submission of the application. For this activity, the appellant recovers service charges from the travellers. The services rendered by the appellant are not covered under the definition of BAS as the appellant is not involved in promotion and marketing or sale of any goods or service nor is the appellant providing any customer care service on behalf of the client or procuring

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goods or services which are inputs for the client. While providing such services, the appellant does not act as an agent of the embassies or of the individuals who require the assistance in obtaining VISA and, therefore, such services are not provided on behalf of anyone. The activities of the appellant would not be covered under BAS.

18. In this connection reliance can be placed on a decision of the Tribunal in Good Wind Travels Pvt. Ltd. vs. Commissioner of C. Ex., Ahmedabad⁸

wherein it was held that such a service would not be taxable. The relevant portion of the decision is reproduced below:

"5. It is undisputed fact in this case that the appellant is only providing assistance in visa and passport related work to the individuals and if that be so, the Board Circular dated 20-4-2011 will cover the issue in favour of the assessee, which we quote:-

Circular No. 137/6/2011-S.T., dated 20-4-2011

Subject: Assistance provided for processing visa applications - Regarding.

An issue has been brought before the Board, seeding a clarification as to whether service tax liability would arise on the assistance provided by visa facilitators, to individuals directly, for processing of visa applications.

2. The same has been examined. Assistance provided by a visa facilitator, for obtaining visa, to a visa applicant or for foreign employer does not fall within the scope of supply of manpower service. Visa facilitators, while providing visa assistance directly to individuals does not act on behalf of the embassies, as agents of the principal and hence service tax is not leviable within the meaning of business auxiliary service. Also where the assistance is rendered to an individual directly, by a visa facilitator, and the visa applicant pays the service charge on his own (meaning such service charge is not borne by any business entity), the same cannot be considered

8. 2013 (31) S.T.R. 598 (Tri.- Ahmd.)

8

as support service for business or commerce.

3. Visa facilitators, merely facilitate the procurement of visa and directly assist individuals who intend to travel abroad, to complete the immigration formalities. Visa facilitators collect certain statutory charges like visa fee, certification fee, attestation fee, emigration fee, etc. from the visa applicant, which are remitted to the respective authorities, and in addition collect service charges for themselves as remuneration for the assistance provided by them to obtain the visa. Such a service provided by a visa facilitator, in the form of assistance to individuals directly, to obtain a visa, does not fall under any of the taxable services under section 65(105) of the Finance Act, 1994. Hence service tax is not attracted.

"4. However, service tax is leviable on any service provided other than assistance directly to individuals for obtaining visa, falling under the description of any taxable service, as classifiable under the appropriate heading. To cite a few instances, where in addition to rendering assistance directly to individuals for obtaining visa, visa facilitators may also act as agents of recruitment or of foreign employer, in which case, service tax is leviable to the extent under the service of 'supply of manpower'. In certain other cases, for example, a visa facilitator, may be rendering visa assistance to individuals who are employed in a business entity, but the service charge may be paid by the business entity on behalf of those individuals, to the visa facilitator, in which case, service tax is leviable under 'business support service'."

6. In view of the stand taken by the Board that the service rendered by the appellant does not fall under any category of services leviable to service tax, we find that the impugned order is liable to be set aside and we do so. Impugned order is set aside and appeal is allowed."

(emphasis supplied)

19. In view of the aforesaid, service tax could not have been demanded from the appellant under BAS on the service charges received by the appellant from clients for visa consultation.

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Third Issue

20. This issue is regarding non-payment of service tax under BAS on the incentives received from Mediclaim Insurance Companies. Learned counsel for the appellant submitted that no service tax would be payable under BAS as the services rendered by the appellant are not covered under any of the clauses of BAS.

21. The appellant arranges for medical insurance of clients from various Insurance Companies which have tie ups with the appellant. The policies are issued in the names of passengers and the premium charged by Insurance Companies is recovered from passengers without any markup. The Insurance Companies provide the mediclaim insurance policies to the individuals. The Insurance Companies make payment of incentives on their own as per their policy on which the appellant has no control. The appellant merely receives incentives from the insurance companies and does not raise any invoice on the Insurance Company. The liability to pay service tax on commission paid to agents is on Insurance Company. The appellant is not involved in promotion or marketing or sale of any goods or service and the appellant is also not providing any customer care service on behalf of the client or procuring goods or services for the clients. The activities of the appellant would, therefore, not be covered under BAS.

22. This issue has been examined by the Commissioner (Appeals) in paragraph 9 of the order together with the issue relating to charges received towards Visa Consultation service. The reasoning given by the Commissioner (Appeals) for confirming the demand on the incentives received from Mediclaim Insurance Companies is the same as that for on the service charges received by the appellant from clients for Visa Consultation. For the reasons stated in this order for setting aside the

10

demand of service tax on the service charges received by the appellant from clients for Visa Consultation, the confirmation of this demand would also have to be set aside and is, accordingly, set aside.

Fourth Issue

23. This issue relates to non-payment of service tax under BAS on the incentives received from Foreign Exchange brokers.

24. The submission of the learned counsel for the appellant is that activities of the appellant would not be covered under any of the clauses of BAS. The passenger tenders money to Foreign Exchange vendor directly without any intervention of the appellant.

25. The appellant is not an authorized money changer as per the Reserve Bank of India requirement. Thus, for the Foreign Exchange required by the passenger, the payment is made directly by the passenger in the name of authorized money changer. The authorized money changer makes payment of incentive on its own to the appellant as per their policy and market rates of Foreign Exchange from time to time. The appellant does not raise any invoice on the authorized money changer. The appellant is not involved in promotion or marketing or sale of any goods or services nor is the appellant providing any customer care service on behalf of the client or procuring goods or services for the client. The client or the service recipient are the Foreign Exchange brokers who pay for the service.

26. The reasons given by the Commissioner (Appeals) for confirming the demand on the incentives received by the appellant from Foreign Exchange brokers is the same as that for confirmation of the demand on service charges received by the appellant from clients for Visa Consultation. The confirmation of this demand, therefore, would also have to be set aside.

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Fifth Issue

27. This issue relates to non-payment of service tax under the category BAS on the incentives received from Miscellaneous Receipts. The demand under the head Miscellaneous receipts corresponds to the revenue received on the account of the following activities:

a. Railway tickets

b. CRS Companies

c. Hotel accommodation

28. Learned counsel for the appellant submitted that the aforesaid services have already been taxed under 'air travel agency' service and so any consideration arising from the same transaction cannot be taxed under a different category. Learned counsel for the appellant also submitted that no service tax is payable under BAS as the services rendered by the appellant are not covered under any of the clauses of BAS. According to the learned counsel for the appellant, the appellant is not involved in promotion or marketing or sale of any goods or service.

29. There is force in the submission advanced by the learned counsel for the appellant. When the aforesaid services have already been taxed under 'air travel agency' service, the incentives received from Miscellaneous Receipts arising out of the same transaction cannot be taxed under BAS. The confirmation of demand, therefore, deserves to be set and is set aside.

Sixth Issue

30. This issue relates to denial of CENVAT credit on the ground that the invoices bear the address as 1400, Modi Tower, 98 Nehru Place, New Delhi.

31. Learned counsel for the appellant submitted that mere mention of a wrong address of the recipient of goods/services in invoices cannot be

12

a ground to deny CENVAT credit when the receipt of goods/services is not in question.

32. The impugned order has denied the CENVAT credit on the ground that invoices bare address as 1400, Modi Tower, 98 Nehru Place which is the address of the registered premises and not 110, Modi Tower, 98 Nehru Place which is the address of the travel agency division of the appellant specified in ST-2 form.

33. CENVAT credit has been denied solely on the ground of wrong address of the service provider. There is no dispute on receipt of service and payment made. According to the appellant, the issue of PAN based registration has been decided in favour of the appellant meaning thereby that registration of the service provider is not in dispute. Thus, once registration of service provider and rendition of service and payment thereof is not in dispute, mere mention of the wrong address is a procedural defect and CENVAT credit cannot be denied for this reason.

34. In this connection, reference can be made of the decision of the Tribunal in Toll (I) Logistics Pvt. Ltd. vs. Commissioner of Central Excise, Pune-I⁹ and the relevant paragraphs are reproduced below:

"4.2 Further, learned Counsel states that Cenvat Credit Rules, 2004 lays more thrust on substantive provision and less on the procedural provisions. Once the substantive provisions are complied with for a mere technical lapse the right to Cenvat credit cannot be denied to the appellant. As appellant had satisfied all requirements except relating to address on invoice, which being a mere technical lapse should be considered as per Circular No. 441/7/99-CX, dated 23-12-1999. The circular provides that the Assistant Commissioner of Central Excise having jurisdiction over factory of manufacturer shall allow credit of duty on

13

in case of Commissioner of Customs, Meerut v. Triveny Engineering & Industries Ltd. - 2004 (177) E.L.T. 211 (Tri.-Del.), wherein, it was held, credit is not deniable on ground of procedural defects.

*****

7. Having considered the rival contentions, I find that as there was no lapse in payment of duty or tax and filing Service Tax return by the appellant the other premises/units also belong to the appellant from where the output services are rendered. The input services to which the invoices in dispute relate are utilized in rendering output taxable service. The appellant have made payment of input service along with the Service Tax charged by the service provider. The appellant have maintained proper records in normal course of business, and have disclosed the credit taken regularly in periodical returns. Thus I hold that the appellant is entitled to avail Cenvat credit, disputed by Revenue. I further hold that show cause notice is time-barred, and extended period of limitation is not invocable."

35. The appellant was, therefore, clearly entitled to CENVAT credit and it could not have been denied merely on the ground of procedural lapses.

36. Thus, for all the reasons stated above, the impugned order dated 28.11.2016 passed by the Commissioner (Appeals) cannot be sustained and is set aside. The appeal is, accordingly, allowed. (Order Pronounced on 20.12.2023)

(JUSTICE DILIP GUPTA)

PRESIDENT

(HEMAMBIKA R. PRIYA)

MEMBER (TECHNICAL)

Jyoti, Shreya