[2016-TIOL-2072-CESTAT-MUM] Jet Airways India Ltd vs. Commissioner of Service Tax, Mumbai

Facts
The Appellant is engaged in running airlines all over India as well as outside India. They have entered into agreements with the providers of computer reservation system (CRS) services outside India to display real time availability of flights, reservation of flights etc. on the basis of data collected from the main server of the Appellant for a consideration to be paid on the basis of each ticket issued by the travel agent.

A show cause notice was issued demanding service tax, interest and penalties on such payments made outside India u/s. 66A of the Finance Act, 1994 under reverse charge mechanism falling under “online information and database access or retrieval service”. It was argued that to be covered under the said service category, the person who renders that service should be the owner or should have exclusive right over the relevant information/data so as to put him in a position to charge the recipient for access/retrieval of that data/information.

However in the present case the data/information was owned by the Appellant itself. Further revenue neutrality was claimed to set aside the demands.

Held
The Tribunal relying on the decision of British Airways [2014-TIOL-979-CESTAT-DEL] held that the classification of the activity is correctly determined by the revenue and therefore the demand stands correct. However, it was noted that the tax paid under reverse charge mechanism would be available as CENVAT credit against the output service tax liability of “transport by air and other services” resulting in a revenue neutral situation. It was held that it is trite law that question of revenue neutrality is a good ground, more so when the tax liability is being discharged under reverse charge mechanism and therefore demands, interest and penalties imposed are set aside.