The Bombay High Court has waived the pre-deposit considering the fact that taxability performance linked incentives/commission covered under rare cases.
The bench of Justice M.S. Sonak and Justice Jitendra Jain has observed that the petitioner appears to have a strong prima facie case and that the test of “likelihood of success” is liable to be answered in its favour.
The statute no longer confers any discretion on the first appellate authority or the CESTAT to waive the condition of pre-deposit. It is in the backdrop that the writ petitioner has approached the Court under Section 35F of the Central Excise Act, 1944 to submit that this is one of those rare and deserving cases where the Court would be justified in invoking its jurisdiction conferred by Article 226 of the Constitution.
The principal demand appears to have come to be created by virtue of certain incentive payments which were received by the petitioner in connection with the use of the Computer Reservation System and which enabled it to access the online computer booking network.
The petitioner while assailing the view taken by the Adjudicating Authority in this respect, however, had relied upon the judgment rendered by a Larger Bench of the CESTAT in Kafila Hospitality & Travels Pvt. Ltd. vs. Commr. Of S.T., Delhi.
In Kafila Hospitality case, the central issue which arose for consideration was whether the use of the Central Reservation System created by companies by approved agents of the International Air Ticketing Association [IATA] could be classified as a business auxiliary service and thus exigible to tax. It was held that commissions are leviable to service tax inasmuch as the commission received by the air travel agent from the airlines/IATA agent has to be included in the value of the taxable service provided by the air travel agent under rule 6(1)(iv) of the Service tax (Determination of Value Rules, 2006.
The court while dealing with the ambit of Section 35F as well as situations where Courts would be justified in intervening and dispensing with a condition of pre-deposit had directly arisen for consideration in Ajay Sagar vs Principal Commissioner of Customs (Imports).
The court held that the issue of taxability of performance linked incentives qualify the test of rare and exceptional cases and pre-deposit shall stand waived.
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Case Details
Case Title: Just Click Travels Private Limited Versus UOI
Case No.: W.P.(C) 8896/2023
Date: 09.12.2024
Counsel For Appellant: Sr. Adv Sanjeev Anand
Counsel For Respondent: Bhagvan Swarup Shukla
