Exemption from service tax

No, such service shall not be exempted from service tax  as there is no particular notification relating to it.

No.. there is no such exemption...

Thanx Avtansh & Anju....

my client is a service provider registered as an 'Air Travel Agent'. He also has certificate of IATA. But he does not purchase tickets directly from airlines co. but he purcahses tickets from agent of airlines cos. Ultimately he acts as Sub Agent and as per the definition of Air Travel Agent given in service tax, Air Travel Agent service is not applicable on sub agents. 

My question is whether he is eligible to charge Service Tax by special rates i.e. 0.618% & 1.236%, just for the reason that he has certificate of IATA??? or he covers under Business Auxilliary Service???

Please reply...

Quick response is highly appreciated...

Thanx

The Commissioner of Central Excise-1, New Delhi in its Letter C. No. CE/20/ST/Air Travel/97, dated 27-8-1997 has stated that sub-agent who are not getting commission as also not making out tickets directly from airlines are not required to pay service tax and get registration from service tax authority of the Central Excise Department.

Hence, the sub-agent would fall within the scope of Business Auxilliary Services.

Thanx Anju.......

Anju- The aforesaid letter is no more effective because after valuation rules coming into existence i.e. (April 19, 2006) the whole scenario got changed and all such letters/trade ciculars and notifications were withdrawn.

Hi Lokesh,

‘Air travel agent’ is defined in Section 65(4) of the Finance Act, 1994 to mean any person engaged in providing any service connected with booking of air travel ticket. Further it also needs to be appreciated that air travel ticket booking can be undertaken only by persons registered with IATA. However Section 65(105)(l) of the Act does not lay down any condition requiring registration with IATA. In other words Section 65(105)(l) of the Act seeks to tax all those persons who are engaged in providing air travel ticketing services irrespective of whether they are registered with IATA or not.

Rule 6(7) of the Service Tax Rules, 1994 (‘Rules’), gives an option to levy service tax @ 0.618% of basic fare in case of domestic travel and @ 1.236% of basic fare in case of international travel.  The term ‘basic fare’ has been clarified in Trade Notice No. 6/97- ST dated July 1, 1997 to mean that part of the fare on which commission is payable by the airlines. Therefore, if your client is able to determine and demonstrate the commission received by IATA agents from airlines, then they have the option to charge service tax @ 0.618% of basic fare in case of domestic bookings and 1.236% of basic fare in case of international bookings.

Alternatively from the total amount received from the customer, your client can reduce the amount charged by IATA agents and levy tax @ 12.36% on the residuary value i.e. transaction fee charged by them to its customers

Thanx Abhijeet,

Actually my problem is about tax liability of my client. He buys ticket from agents of airline cos. and not directly from Airline cos. The seller of ticket charges service tax @ 0.618% & 1.236% as the case may be. Now my client sells tickets to his customers and he also charges ST @ 0.618% & 1.236%. Now confliction is that only one person, either Airline co's agent or my client can be Air Travel Agent. If Airline co's agent is Air Tarvel Agent as per Sec 65(105) of finance act 1994,

then he can charge ST by the abovesaid rates but my client will have to charge ST by 12.36% as usual.

Are you agree with my points????

should I suggest him to charge & pay ST @ 12.36%??????

plz remember both parties hold IATA accreditation Certificate. plz give response as early as possible.

Thanx in advance....