Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(CESTAT) 531

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
S. S. GARG, Judicial Member, P. ANJANI KUMAR, Technical Member
TSI Yatra Pvt. Ltd. – Appellant
Versus
Commissioner of Central Goods & Service Tax, Gurugram – Respondent
Service Tax Appeal No.60479 Of 2017|Service Tax Appeal No.60667 of 2018|Service Tax Appeal No.60219 Of 2019|FINAL ORDER Nos.60281-60283/2026

Advocates:
For the Appellants/Petitioners: Shri Arjun Raghavendera, Shri Manjunath A N, Shri Aditya Sarin
For the Respondents: Shri C. Dhanasekaran

CRS/GDS incentives to air travel agents not taxable as no BAS/intermediary service rendered; basic fare excludes fuel surcharge; proportionate CENVAT reversal qualifies for abatement; procedural lapses do not deny adjustments/credits.

Headnote:(A) Finance Act, 1994 - Service Tax - Air travel agent services - Incentives received from CRS/GDS companies not taxable under Business Auxiliary Service or Intermediary Service as travel agents promote own business, not that of CRS/GDS; passenger unaware of CRS/GDS; incentives for achieving targets not consideration under Section 67 - Larger Bench decision holds no promotion of CRS/GDS business or taxable service rendered (Paras 17, 17.1).

(B) Service Tax Rules, 1994 - Rule 6(7) - Basic fare for tax payment excludes fuel surcharge where commission normally paid only on base fare; option exercised on base fare upheld; no inclusion of fuel surcharge (Para 18).

(C) Notification No. 1/2006-ST - Abatement available despite proportionate reversal of CENVAT credit on common input services for abated/non-abated services; reversal equals non-availment; pre-01.04.2011 no prescribed formula, post formula under CCR Rule 6(3A) followed using value per Rule 6(7); cryptic orders set aside (Paras 19-19.12).

(D) Service Tax Rules, 1994 - Rule 6(4A)/(4B) - Adjustment of excess tax paid allowed despite procedural lapses like non-intimation or monetary limit exceedance; no unjust enrichment (Para 20). (E) CENVAT Credit Rules, 2004 - Rule 2(l) - Credit admissible on gateway charges (banking services) as input service for output service despite reimbursement; no value addition or burden-bearing requirement (Para 21). (F) Taxation of Services (Provided from Outside India) Rules, 2006 - Rule 3(ii) - No reverse charge on services performed entirely abroad like foreign accommodation booking, business exhibitions; reimbursements not taxable services (Para 22). (G) Section 73 - Extended period not invocable absent suppression evidence; facts disclosed in returns/letters/audit (Para 23).

Facts of the case:
Appellants engaged in air ticket booking received CRS/GDS incentives, paid tax on base fare excluding fuel surcharge under Rule 6(7), reversed proportionate CENVAT credit for abatement on abated services, adjusted excess tax, claimed credit on reimbursed gateway charges, faced RCM demands on foreign expenses; impugned orders confirmed demands.

Findings of Court:
All demands set aside; abatement eligible; adjustments/credits valid; foreign services non-taxable; extended period inapplicable.

Issues: Taxability of CRS/GDS incentives; fuel surcharge inclusion in basic fare; abatement eligibility post-credit reversal; excess tax adjustment validity; gateway credit eligibility; RCM on foreign services; limitation.

Ratio Decidendi: Incentives not consideration for BAS as no promotion of CRS/GDS; basic fare per normal commission practice; proportionate reversal satisfies abatement condition; procedural lapses not deny substantive relief; reimbursed input services eligible if used for output; speaking orders mandatory; no suppression proven.

Result: Appeals allowed; impugned orders set aside.

Table of Content
1. appellants' business and revenue's demands overview. (Para 1 , 2)
2. crs/gds incentives not taxable as bas. (Para 3 , 17)
3. fuel surcharge excluded from basic fare. (Para 4 , 18)
4. abatement allowed despite proportionate credit reversal. (Para 5 , 19)
5. excess tax adjustment permitted despite procedural lapses. (Para 6 , 20)
6. no rcm on foreign services or reimbursements. (Para 7 , 22)
7. cenvat credit eligible on gateway charges. (Para 8 , 21)
8. no extended limitation; all demands set aside. (Para 23 , 24)

P. ANJANI KUMAR:

M/s Yatra Online Pvt Ltd (Appellant-1) M/s TSI Yatra Pvt Ltd (Appellant-2) are engaged in the business of booking of air tickets for various domestic and international airlines; Appellant-2 is engaged in the business of booking through their branch offices; while Appellant-1 obtained single registration under the category of "air travel agent", Appallent-2 obtained separate registrations for Head office and Branch Offices up to March 31, 2013 and a centralised registration thereafter. Both the appellants filed the following Appeals against the impugned orders as shown below.

Appellant-1[M/s Yatra Online Pvt Ltd]

Appellant-2 [M/s TSI Yatra Pvt Ltd]

2. Brief facts of the cases are that the appellants are engaged in the business of booking of air tickets for various domestic and international airlines. The operation module of the appellants is that the CRS / GDS companies share details of air tickets of airlines, through the platform systems developed by them showing flight details of various airlines, availability of tickets, best available prices, etc, with the appellant travel agents on a real-time basis, when they access the portal/platforms; CRS / GDS companies provide the service at the behest of the airlines who pay them on the basis of the air tickets sold; the platform of the CRS/GDS companies acts as an interface between the airlines and the travel agents; the CRS/GDS Companies enter into contracts with travel agents to make their IT platform available to such travel agents for booking air tickets; CRS/GDS Companies do not charge any amount from the travel agents for using the said platform of the CRS/GDS companies; instead, CRS/GDS companies pay bonuses and incentives to the travel agents to encourage them to use their system on a preferential basis; the end users/ consumers booking tickets through travel agents have no access to the said IT platform of CRS/GDS Companies.

2.1. Revenue issued Show Cause Notices as above, alleging the following.

(i). The appellants were required to pay Service Tax on the incentives extended by CRS/GDS companies, during April 2007 to March 2014, under Business Auxiliary Service’ and for the period after March 2014 as an ‘intermediary’ between customers and CRS companies.

(ii). The appellants were required to pay Service Tax on the gross value of commission (base fare + fuel surcharge) as per Rule 6(7) of the Service Tax Rules, 1994, during the period from April 2008 to March 2012.

(iii). Appellants have wrongly availed the benefit of abatement, in terms of Notifications, No. 1/2006-ST dated 01.03.2006 and 26/2012-ST dated 20.06.2012, during the period April 2007 to March 2014.

(iv). The Appellants have short paid Service Tax for the months of September 2007, November 2007, December 2007 and March 2008 due to wrong adjustment of excess service tax paid during the months of June 2007, July 2007, August 2007 and October 2007.

(v). The Appellants were required to pay Service Tax, under the reverse charge mechanism on imported services, including tour operator services, business exhibition services, and recurring UK office expenses Non- payment of service tax, during the period 2007-08 to 2011-12.

(vi). The Appellants have wrongly availed CENVAT credit of service tax paid on gateway charges (banking and financial services) where an incentive was provided by the airlines, during the period August, 2007.

Submissions on behalf of the appellant (i). Demand of service tax on

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