The air travel agents are liable to service tax and file service tax return , but not the sub-agents, who are not getting commission directly from airline are not required to pay service tax and need not get registration from service tax authority (Letter C. NO. CE/20/ST/Air travel/97 dated 27-8-1997 of the commissioner of Central Excise-, New Delhi).
The said circular is given as under
Letter C. No. CE/20/ST/Air Travel/97, dated 27-8-1997 of the New Delhi Commissionerate
Sub: Service Tax on Air Travel Agents — Clarification
Please refer to this office letter No. CE/20/ST/Air Travel/97/2794 & 2795, dated 13-4-1997 on the above subject by which clarification on various queries raised therein was given. The issue of collecting Service Tax by GSA/IATA etc. were again examined on the basis of representation made and views expressed in the meetings held with the Association etc.
After ascertaining the factual position of accounting, it has been decided that the person responsible for collecting the Service Tax and getting registration will be that Air Travel Agent who is receiving the commission from the Airlines for booking of Air Travel after depositing the ticket money and rendering the account of the sale to the airlines concerned. The details of the commission payable by airlines is indicated in the agency agreement entered into between Airlines and Air Travel Agents.
Therefore GSA/IATA Agents in respect of tickets issued by him directly on collection of fare, who are getting commission from airlines for the services rendered by them is to collect service tax. Sub-agent, sub sub-agent who are not getting commission as also not making out tickets directly from airlines are not required to collect service tax and get registration from service tax authority of the Central Excise Department.
Regarding chargeability of service tax on free ticket, since no fare is charged or commission is paid by airlines to Air Travel Agent, therefore no service tax on such transaction is payable.
Regarding taking registration by each branch of Air Travel Agent having registered office at Delhi, it is clarified that those GSA/Air Travel Agent, who are having their registered/Administrative office at Delhi and having branch offices in the State of Haryana, a single registration may be taken for registered office at Delhi, with Service Tax Cell of Central Excise, Delhi-I Commissionerate, Central Revenue Building, I.P. Estate, New Delhi. They will centrally account for all service tax to this cell for all service tax due in Delhi and State of Haryana.
Earlier clarification issued on this subject not in conformity with the above clarification will be considered as null and void.