AERO WORLD TRAVELS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellant is a official agent of Uzbekistan Airways. The dispute raised in the present appeal is the quantum of service tax, which the appellant was liable to pay during the period 1st April, 1999 to 30th September, 2000. The appellant filed return before the Central Excise authorities showing tax payment @ 0.5% of only price at which the ticket was sold by the appellant to passengers. The Revenue authorities took the view that 0.5% should have been applied on the fares indicated on the tickets, since that was considered "basic fare". A view was taken that the appellant was opting to pay 0.5% of the "basic fare" in terms of Sub -rule 7 of Rule 6 of Service Tax Rules, 1994. Thus, the impugned orders held that the appellant was liable to pay service tax amounting to Rs. 8,03,815/ - for the said period more than the appellants' total earning (Rs. 7,20,326/ -) on the sale of tickets.

(2.) THE appellant's contention is that under Section 66 of the Finance Act, the rate of tax was only 5% of taxable service and Notification No. dated 26 -6 -1997 had exempted any value of taxable service in excess of the commission received by the Air Travel Agent. It is, therefore, being pointed out that, in any case, the appellant cannot be liable for service tax in excess of 5% of the total margin realized. During the hearing of the case, it was pointed out that the Revenue authorities were in error in treating the printed fare on the tickets as basic fare and demanding only service tax at 0.5% of that amounts. It is also being emphasized that the option to pay at 0.5% of the basic fare cannot be converted into a burden on the appellant, of paying service tax at an amount higher than his total margin.

(3.) THE appellant is right in his contention that his margin from the sale of ticket alone can constitute his agency commission and a tax is to be levied on that commission. A perusal of the records shows that the appellant was selling tickets to passengers and remitting the amounts realized from passengers to the airline after taking a margin of about Rs. 200/ - to Rs. 300/ - per ticket. This margin alone can be treated as agency commission, though the airline has certified that they are not giving any commission. The transaction to be discerned from the record is that the appellant's relationship with the airline was that of an agent and the margin in the transaction constituted agency commission. "Taxation service" in relation to "Air Travel Agent" has been defined as any service provided to a customer in relation to the booking of passenger. In the present case, the appellant was not receiving any further commission from the airlines beyond the margin in selling tickets. In the result, the appeal is allowed by setting aside the service tax demand in excess of the tax worked out at 5% of the margin. No penalty is also called for since the appellant was paying service tax on his transaction in time and filing return. The appellant shall be entitled to consequential relief, if any.