M\/s. Island Aviation India Pvt. Ltd. Versus Commissioner of GST & Central Excise Chennai
Service Tax
2019 (2) TMI 678 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 18-1-2019
Appeal Nos. ST\/706 & 707\/2012 – Final Order Nos. 40156-40157\/2019
Service Tax
Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical)
\nShri V.S. Manoj, Advocate for the Appellant
\nShri K. Veerabhadra Reddy, ADC (AR) for the Respondent
\nORDER
\nPer Bench
\nThe appellants are functioning as General Sales Agent of Malaysian Airlines in the territory of South India for cargo transportation and other services provided by Malaysian Airlines. They are registered with the Service Tax Department. During the course of audit of accounts, it was noticed that the appellant had entered in a General Sales Agency Agreement (Cargo) with Malaysian Airlines Systems, Berhad on 30.3.2007 for functioning as General Sales Agent for cargo transportation and other services pro<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n les Agent. The appellant has discharged the service tax on the entire commission received by them as General Sales Agent. This agreement between the parties also provide for a specific arrangement wherein the appellant is entitled to purchase cargo slot at the rater specified \/ agreed and make profit from sale of such cargo space to exporter. He submitted that the agreement specifically provides that when there is a purchase and sale, the appellant is not entitled for any commission. In the present proceedings, the demand is not raised on the commission received by the appellant as General Sales Agent. The demand is confined to the amount calculated as a difference between the purchase price and sale price of the cargo space. In such purchase of cargo space, the appellant is not acting in the capacity of a General Sales Agent for Malaysian Airlines and therefore is not receiving any commission from them. In fact, it is only a specific arrangement whereby the appellant is entitled to pu<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n slot from the Malaysian Airlines and not as General Sales Agent. He adverted to the annexure to the show cause notice and argued that the annexure would show that the alleged amount of taxable value is arrived by department only from the difference of the sale price and purchase price of the cargo slot. The adjudicating authority confirmed the demand observing that the issuance of the airway bill by the appellant indicates that there is no trade of cargo space. In fact, the adjudicating authority has not considered the specific arrangement that the appellant is responsible to make payment of freight irrespective whether customer makes the payment. In such specific arrangement, the appellant may make profit or sell the slot at a price less than the purchase price which may result in loss to the appellant. In any case the price received by the appellant is only trading profit and not commission. The issuance of the House Airway Bill by the appellant will also prove that the transaction <\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n e where Malaysian Airlines and the appellant have prior specific rate arrangements, the appellant who is a general sales agent is not entitled to any commission. It is clear from the above clauses that the appellant is rendering services as air cargo agent of Malaysian Airlines. It is also clear from the said clauses that income is received by the appellant from Malaysian Airlines in the form of commission at the rate of 5% of IATA published rates or in the form of difference between the rates specified by Malaysian Airlines and the rates collected from the shipper \/ customer. Thus, the consideration is termed in a different manner and it is actually a commission received by the appellant. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n gent is not entitled to any commission.” = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" M\/s. Island Aviation India Pvt. Ltd. Versus Commissioner of GST & Central Excise ChennaiService Tax2019 (2) TMI 678 – CESTAT CHENNAI – TMICESTAT CHENNAI – ATDated:- 18-1-2019Appeal Nos. ST\/706 & 707\/2012 – Final Order Nos. 40156-40157\/2019Service TaxMs. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Shri V.S. Manoj, Advocate for the … Continue reading “M\/s. Island Aviation India Pvt. Ltd. Versus Commissioner of GST & Central Excise Chennai”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-16725","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/16725","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16725"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/16725\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16725"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16725"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16725"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n4. Heard both sides.
\n5.1 The service tax demand is raised under BAS. The appellant has countered the allegations in the show cause notice stating that they are engaged not only as general sales agent but also receive income in the form of trading of cargo space. For whatever commission received as <\/p>\n
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\n6. As per clause 9, it is seen that the Malaysian Airlines and the appellant has some arrangement with regard to the rates of the cargo slots which can be sold by the appellant. For slots, for which there is specific rate arrangement between the parties, the appellant is not entitled to any commission. Thus, the appellant purchases the cargo slots and thereafter sells the same to customer \/ exporters. The difference between sale price and the purchase price of the cargo slot is sought to be brought within the ambit of commission by the department. In such transaction, it is specifically stated in clause 9 that the appellant is not entitled to commission. In fact, for transactions as a General Sales Agent, the appellant is entitled to commission as per IATA regulations. In other transaction of sale of cargo space of specific agreed rates, it is not specified that appellant is eligible for any consideration. This means the appellant can sell suc<\/p>\n
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