I have a prop. Business Client dealing in Trading of Air Tickets. He Purchased tickets from IATA agents & sell to Public & other Travel Agents. Does Service Tax is Applicable to Him. He also receives commission from Air Line Ticket Suppliers.
Section 65 (105) (m) of the Finance Act, 1994 defines air travel agent service as any service provided or to be provided to any person, by an air travel agent in relation to the booking of passage for travel by air. Further, section 65 (4) defines air travel agent as any person engaged in providing any service connected with the booking of passage for travel by air.It may also be noted that as per Section 67 of Finance Act read with Rule 6 of Service Tax(Determination of Value) Rules 2006, in case of Air Travel Agent, the value of taxable service shall be the gross amount charged by the air travel agent and includes the commission received by the air travel agent FROM THE AIRLINE but does not include, the airfare collected by air travel agent in respect of service provided by him. Here, the sole proprietor is receiving commission from the IATA agents and not from the AIRLINE, therefore, he is not required to pay service tax under 'AIR TRAVEL AGENT'service. Herein, Letter C. No. CE/20/ST/Air Travel/97, dated 27-8-1997 issued by the New Delhi Commissionerate may also be referred wherein, the same thing was clarified.However, it may be noted that the said service shall get covered under the head 'BUSINESS AUXILLARY SERVICE' and accordingly service tax has to be paid.
In nutshell, the proprietor is requied to pay service tax on the commission received under the head 'BUSINESS AUXILLARY SERVICE' and not under 'AIR TRAVEL AGENT SERVICE'.
Hope the above suffice.
So, Dear Vikas, One thing is very clear that Service tax is applicable, but the thing as said by Akash Sir is looking correct, on the other hand, as the prop. is receiving commission from Airline ticket suppliers, it is also looking to me that the service may come under Air Travel Service...... but I am finding Mr. Ashish Ji with best answer...
I would request you to read the circular referred to in the reply given by me. It will help you in understanding the provisions in a better manner.
Further, I would also appreciate if you can support your answer with proper reasoning rather than saying that 'surely it will be....'.