By TIOL News Service

MUMBAI, MAY 27, 2016: THE total Service Tax demand against the two appellant airlines is more than Rs.40 crores.

The branch office of appellant is in India and the head office is situated in Dubai and Doha. The dispute is as to whether the appellants, branch office of M/s Emirates, Dubai and M/s Qatar Airways, Doha is required to discharge Service Tax liability under the category of "online information and data base access or retrieval service" u/s 66A of the Finance Act, 1994, as contended by the Department, when the head office has made the payment for the services provided by CRS companies or otherwise.

The CESTAT had granted a stay in the matter on 22.07.2014 by observing thus -

S.T. - "Online information and data base access and retrieval services" - services provided by foreign based companies, in respect of computerised reservation systems (CRS)/Global Distribution System (GDS) - an identical issue was considered by the Tribunal in the case of British Airways -  2014-TIOL-979-CESTAT-DEL  where it is held that as the service providers and the service recipients are situated outside India and the consideration for the services rendered has also been paid outside India, the said activity would be not taxable in India under reverse charge mechanism or otherwise - decision of the Tribunal in British Airways squarely applies to the facts of the case - unconditional waiver from pre deposit of adjudged dues granted & recovery stayed: CESTAT [Para 2, 4]

We reported this order as - 2014-TIOL-1767-CESTAT-MUM.

The appeals of the two airlines were heard in March and final orders have been issued recently.

The Bench observed that the issue involved is same as in the case of British Airways - 2014-TIOL-979-CESTAT-DEL and where it is held by a Majority that such payments are not taxable as the Indian branch office cannot be treated as recipient of the service provided by the CRS companies under Section 66A of the Finance Act, 1994.

After reproducing the findings of the third Member recorded in paragraphs 42 to 53 of the said Majority decision, the Bench concluded that the impugned orders are not sustainable.

In fine, the appeals were allowed with consequential relief.

(See 2016-TIOL-1263-CESTAT-MUM)