“Convenience Fee” & “Cancellation Fee” Not Connected To Business Promotion; CESTAT Quashes Service Tax Demand Against Yatra Online

Yatra Online Pvt. Ltd. challenged the imposition of service tax on convenience fees and cancellation charges collected from customers. The issue revolved around whether these charges constituted consideration for services rendered or were merely business promotion expenses. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled in favor of Yatra, stating that such charges were not liable to service tax as they were incidental to the main service of booking tickets. The decision highlighted the distinction between service charges and consideration for services under tax law. This case underscores the importance of understanding the tax implications of ancillary charges in service industries.