TaxTMI 
TaxTMI 
2017 (3) TMI 1024
X X X X Extracts X X X X
X X X X Extracts X X X X
....d, AIL had a 100% subsidiary in the name of Airline Allied Services Limited (AASL). AIL and AASL entered into a Memorandum of Understanding dated 29.03.1999 for managing the affairs of AASL. They also entered into three agreements namely, (i) Aircraft Lease Agreement (ii) Engineering and Maintenance Agreement, and (iii) Ground Traffic, other Support Services and Handling Agreement. The MOU and the three agreements were entered into with the objective of overall improvement in the work of AIL. The dispute pertains to the question whether service tax is payable by AIL on the activities performed by AIL for AASL under the said agreements. Revenue was of the view that activities carried out by AIL, as per the above agreements, involve services taxable under Finance Act, 1994. Accordingly, show cause notice dated 24.10.2008 was issued and the case was adjudicated and demand of service tax to the extent of Rs. 15.7 Crores (out of Rs. 18.7 Crore in SCN) was confirmed against AIL by the adjudicating authority for rendering services of Business Auxiliary Services. Recovery of interest was also ordered and penalty of amount equal to service tax was also imposed. However, the adjudicating aut....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the extended period for demanding service tax. 5. In the appeal filed by the Revenue against dropping of service tax demand amounting to about Rs. 103 Crores, the following ground has been advanced:- The adjudicating authority has wrongly dropped the demand for service tax on 'Management, Maintenance and Repair Service' provided by AIL to AASL for the reason that no separate bill was raised for Management, Maintenance and Repair. It was billed as part of Lease charges only. Revenue has argued that as per the lease agreement, AIL had undertook the liability for Management, Maintenance and Repair of Aircrafts given on lease to AASL. Since the services under Management, Maintenance and Repair has been rendered, the service tax is liable to be paid and the onus is on AIL to provide the actual amount charged. 6. Shri P.K. Sahu, ld. Counsel argued the various grounds extensively. He submitted that on the preliminary ground of jurisdiction, the show cause notice issued by ADG, DGCEI is bad in law and liable to be set-aside in view of the decision of the Hon'ble Delhi High Court in the case of Mangali Impex Limited (supra). He submits that AIL could not realize the charges from AAS....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... notice issued by ADG, DGCEI for demand of service tax under the Finance Act, 1994. We note that CBEC, vide Notification No. 3/2004 dated 11.03.2004 has appointed the ADG, DGCEI as proper officer in terms of Rule 3 of Service Tax Rules, 1994. Accordingly, we find no infirmity in the jurisdication of ADG DGCEI to issue the present show cause notice. 9. The entire dispute pertains to the agreement entered into by AIL with AASL in terms of which the AIL rendered support to AASL for the purpose of Ground Traffic and other Support Services. In terms of this agreement, AASL was required to pay AIL certain consideration amounting to approx. 4%. In terms of this agreement AIL was to execute the entire function of running operations on behalf of AASL. The activities included ticketing, IT Support, Billing and Accounting, Administration of Foreign Exchange Transactions, Revenue collection, Reservation support etc. In return, AASL was to pay AIL equivalent to 4% of the revenue generated by AASL. Even though AIL has been raising bills against the services provided by them to AASL, they were also providing financial help to AASL by way of bearing its loss and further providing financial aid to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n such receipts. For this purpose, we remand the matter to the adjudicating authority for obtaining such certificate from the Chartered Accountant and to pass a de-novo order in the matter. 12. Next, we consider the ground of limitation raised by AIL. The contention of AIL is that no allegation of suppression can be fastened against them since the activities of AIL were within the knowledge of the department during the relevant period. Specifically the appellant had cited a letter dated 07.03.2006 written to the Joint Director of Service Tax to inform the various heads under which it was raising bills on AASL. Further, it has been contended that AIL had not paid service tax under the bonafide belief that it is not payable since AIL had not received payment from AASL. In the annual report 2003-04, it is mentioned "Non-charging of service tax on certain services". This implies that even where service tax has been collected the same was not deposited pending registration. It has also been recorded by the statutory auditors that service tax was payable on the services rendered by AIL to AASL. However, on the pretext that consideration has not been received (despite realization of the....