Classification dispute: Appellate Tribunal weighs service tax liability for air transport.

The Appellate Tribunal CESTAT MUMBAI considered the classification of service for service tax liability by M/s. Global Vectra Helicorp Ltd. The Revenue argued for classification under 'Supply of Tangible Goods for Use,' while the appellant contended it fell under 'Air Transport of Passenger.' The Tribunal acknowledged the complexity of the issue and scheduled a final hearing due to the significant revenue involved. A waiver of pre-deposit for the balance amount of dues was granted to the appellant, and recovery was stayed during the appeal's pendency.

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Issues:
Classification of service for service tax liability - Air Transport of Passenger vs. Supply of Tangible Goods for Use

Analysis:
The appeal before the Appellate Tribunal CESTAT MUMBAI concerns the classification of service for service tax liability by M/s. Global Vectra Helicorp Ltd. The Commissioner of Service Tax, Mumbai had issued three show cause notices demanding significant service tax amounts for different periods. The department contended that the activity fell under "Supply of tangible Goods for Use," while the appellant argued that they were discharging service tax liability under the category of 'Air Transport of Passenger' since 2010. The appellant provided details of the contracts with clients, emphasizing the transport of passengers by aircraft on a charter basis. They also highlighted their compliance with DGCA regulations and the Non-Schedule Operator Permit (NSOP) they held. The appellant had paid a substantial sum against the total demand and requested a stay.

The Revenue, represented by the Commissioner (AR), maintained that the service provided by the appellant should be classified under 'Supply of Tangible Goods for Use' based on a Circular issued by CBEC and a previous court decision regarding a similar case involving off-shore activities. The Revenue argued that chartering helicopters should be considered as supplying tangible goods for use, similar to the ruling in the mentioned court case. They opposed the appellant's request for a stay and urged the Tribunal to enforce the terms against the appellant.

After considering the arguments, the Tribunal acknowledged the complexity and contentious nature of the issue regarding the classification of the service provided by the appellant. Recognizing the substantial payment made by the appellant against the demand, the Tribunal deemed it sufficient for the appeal hearing. Given the significant revenue involved, the Tribunal scheduled the case for final hearing on a specific date. As a result, the Tribunal granted a waiver of pre-deposit for the balance amount of dues adjudged against the appellant and stayed the recovery during the appeal's pendency.

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