Appellant's Service Tax Appeal Dismissed

The Tribunal upheld the classification of the appellant's services under "Supply of Tangible Goods Service" and confirmed the service tax demand with interest and penalties. Additionally, the Tribunal upheld the service tax demand under the reverse charge mechanism for services received from abroad. Consequently, the appeal filed by the appellant was dismissed.

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Issues Involved:

1. Classification of services provided by the appellant.
2. Liability of the appellant to pay service tax under reverse charge for services received from abroad.

Issue-wise Detailed Analysis:

1. Classification of Services Provided by the Appellant:

The appellant operates non-scheduled air transport services (Passenger/Cargo/Charter) under a permit issued by the Director General of Civil Aviation (DGCA). During the period from 2006-07 to 2008-09, the appellant provided helicopters to various State Governments for transporting personnel. The appellant maintained the helicopters and provided trained manpower for their operation and maintenance. The appellant received fixed monthly charges based on minimum flying hours and additional hourly charges for actual usage. The department contended that these activities fell under "Supply of Tangible Goods Service" taxable under Section 65(105)(zzzzj) of the Finance Act, 1994.

The appellant argued that their services were for the transportation of passengers by air, which became taxable only from 01.07.2010 under Section 65(105)(zzzo) of the Finance Act. They claimed that the nature of their service was clear from their agreements with clients and their DGCA permit. They relied on several case laws to support their position, including *King Rotors & Air Charter P. Ltd. vs. CC (ACC & Import), Mumbai* and *Global Vectra Helicorp. Ltd. vs. CC (Import) Mumbai*.

The Revenue argued that the appellant provided helicopters on charter hire, receiving fixed monthly charges irrespective of usage, indicating a leasing arrangement rather than transportation service.

The Tribunal, after examining the agreements and relevant case laws, including the decision in *Global Vectra Helicorp Ltd. vs. CC (Import) Mumbai*, concluded that the appellant's services fell under "Supply of Tangible Goods Service." The Tribunal noted that the appellant provided helicopters without transferring possession and effective control, aligning with the definition under Section 65(105)(zzzzj). The Tribunal also referred to the CBEC Circular No. 20/2009, which clarified that chartering of aircrafts without transferring possession and effective control falls under "Supply of Tangible Goods Service."

2. Liability to Pay Service Tax under Reverse Charge for Services Received from Abroad:

The appellant received Technical Inspection and Certification services from service providers abroad, for which they paid Rs. 89,71,685/-. The department asserted that the appellant was liable to pay service tax on these services under the reverse charge mechanism, as per Section 66A of the Finance Act, 1994, read with Rule 2(1)(d) of the Service Tax Rules, 1994.

The Tribunal upheld the department's position, noting that the payments were made for services received from abroad, and the nature of the services was confirmed by the appellant's Chartered Accountant. The Tribunal confirmed that these services were classifiable under Technical Inspection and Certification Service, and the appellant was liable to pay service tax under the reverse charge mechanism.

Conclusion:

The Tribunal upheld the classification of the appellant's services under "Supply of Tangible Goods Service" and confirmed the service tax demand with interest and penalties. The Tribunal also upheld the service tax demand under the reverse charge mechanism for services received from abroad. Consequently, the appeal filed by the appellant was dismissed.

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