Tribunal upholds aircraft charter service as tangible goods supply, applicant to pay pre-deposit, balance dues waived pending appeals.

The Tribunal upheld the Revenue's classification of the aircraft charter service as the supply of tangible goods, requiring a pre-deposit by the applicant. Compliance within a specified period was mandated, with the balance dues waived pending appeals.

---

---

Issues:
Interpretation of service tax liability under different categories for aircraft charter services.

Analysis:
The case involved a dispute regarding the classification of service tax liability for an aircraft being chartered to companies. The applicant paid service tax under the category of Transport of Passengers by Air, but the Revenue contended that it should be classified as the supply of tangible goods, leading to a higher tax liability. The Revenue issued show cause notices for service tax short paid during specific periods, and after adjudication, an amount was confirmed against the applicant along with interest and penalties.

The applicant argued that they did not supply the aircraft to companies but operated it under a license issued by the Director General of Civil Aviation for non-schedule passenger operations. They maintained that the service provided should be considered as non-schedule passenger operations rather than the supply of tangible goods, as they issued boarding passes to individual passengers and filed passenger manifests. The applicant sought admission of the appeal without any pre-deposit.

The Revenue, on the other hand, argued that since the payment for the services was made by the companies chartering the aircraft, the service should be classified under the supply of tangible goods category. They relied on a previous case where a similar activity was classified as supply of tangible goods. The Revenue contended that the possession and control of the aircraft remained with the applicant, fitting into the definition of the supply of tangible goods.

After considering both arguments, the Tribunal noted the competing classifications applicable to the service provided - one when rendered to a passenger and the other when rendered to any person. The Tribunal was of the view that since the aircraft was chartered to companies paying the bills, it was more appropriately classified as the supply of tangible goods. A further pre-deposit was ordered, and the balance dues were waived subject to compliance within a specified timeline.

In conclusion, the Tribunal upheld the Revenue's classification of the service as the supply of tangible goods, requiring a pre-deposit to be made by the applicant. Compliance was mandated within a specified period, and the balance dues were waived pending the appeals.

---