The Supreme Court has held that non taxability of CRS Income and Incentives become final in view of the fact that the Department did not challenge the order passed by the larger Bench of CESTAT in the case of Kafila Hospitality.
“After hearing the learned Additional Solicitor General, appearing on behalf of the appellant and noticing his statement that the relied upon judgment in Kafila Hospitality & Travels Pvt. Ltd. Vs. Commissioner, Service Tax, Delhi, has not been challenged, we see no merit in the appeal. Hence, the civil appeal will stand dismissed,” the bench of Justice K. M. Joseph and Justice B. V. Nagarathna observed.
Kafila Hospitality & Travels Pvt. Ltd. Vs. Commissioner, Service Tax, Delhi: CESTAT
The issue that arises for consideration is whether the incentive received by the appellant for using the CRS Developer is subject to service tax or not.
The Larger Bench in the case of Kafila Hospitality and Travels Pvt. Ltd. has held that the said incentive is not subject to levy of service tax.
The CRS Companies provide OIDAR services to airlines. In lieu of these services, the airlines pay consideration to the CRS Companies in the form of ‘charges/commission‘. The CRS Companies also allow IATA agents to subscribe to their portals for booking tickets for the passengers/sub-agents. Earlier, the IATA agents were charged by the CRS Companies for access to the portals.
However, due to increasing competition in the market, the CRS Companies stopped charging the agents for booking through the portal and instead, in order to increase the flow of business, the CRS Companies started to part with a portion of their consideration (charges/commission) and paid the same to the IATA agents when the agents achieve a minimum quantum of bookings through the concerned CRS portal. This incentive is normally termed as ‘CRS commission’.
Case Title: Principal Commissioner Central Excise Delhi V/S Sotc Travels Services Private Limited
Citation: Civil Appeal No.3702 Of 2023