2017 (5) TMI 1301

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....lying staff along with the aircraft. 2. In addition, the department noticed that the respondent incurred expenditure in foreign currency on account of purchase of spare parts and maintenance of their aircrafts. The department was of the view that such expenditure incurred by the respondent in foreign currency will fall under the Management, maintenance and repair services rendered to foreign aircraft which would be liable to service tax under the reverse charge mechanism in terms of provisions of section 66 AA. Show cause notice dated 23.10.13 issued proposed to demand service tax on the amounts received by the respondent for supplying aircrafts and the helicopter to other entities for use. This was proposed to be classified under 's....

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.... in terms of provisions of section 73(1A) ibid, the proceedings cannot be concluded unless the duty demand, the interest as well as 25% penalty under section 78 is paid within a period of one month from the date of issue of show cause notice. In the present case, only a part of the service tax demand has been paid by the respondent within a period of one month. Consequently, the penalty equal to the service tax demand will be liable to be imposed on the respondents. 3. Commissioner has reduced the demand raised under supply of tangible goods from Rs. 24,68,70,939/- to Rs. 15,40,30,674/- without substantive evidence and verification. Further towards confirmed demand as above, he has allowed adjustment of cenvat credit amounting to Rs. 7,2....

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....ing cited by the Commissioner is that the original demand included amount received by the respondent by way of various other incomes which do not pertain to above services such as dividend income, interest or income tax refund, FDR interest, discount or expenses, profit on sale of mutual funds/ fixed assets, cost of fuel and cost of tickets purchased from IATA Agent etc. For quantification of demand, he has relied upon certificate given by the Chartered Accountant pertaining to the years 2008-2009 2011-2012. 7. The grievance of the Revenue is that the respondent did not co-operate with the department at the time of investigation. They did not offer their records for scrutiny to arrive at fair amount of service tax. Having failed to do so....

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....e decision of adjudicating authority to restrict the demand. 10. While reducing the demand of Service Tax on supply of tangible goods, the Commissioner has also allowed the respondent to adjust the amount of Rs. 14,43,02,740/- already paid by them considering their activity under service of 'transport of passengers by air' including Rs. 5,83,28,905/- paid through cenvat. Revenue is aggrieved with the fact that before allowing such adjustment, Commissioner failed to undertake detailed verification by supporting documents on the basis of which the above adjustment was allowed. On going through records, we note that adjudicating authority has allowed adjustment of the total Service tax paid by respondent and reported in periodic ST-....

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....ces of management, maintenance and repair. Consequently, we find no reason to interfere with the finding of the Commissioner dropping the demand of Service Tax in this category. 12. The adjudicating authority has held that the activities undertaken by the respondents would be rightly classifiable under 'Supply of Tangible Goods for Use' Service. He has also confirmed the demand of service tax under the above service. It is also pertinent to record that the entire service tax demand has also been paid by the respondent along with interest partially through cash and partially by availing cenvat credit which has been regularized by the Commissioner in the impugned order. The Only point on which the Revenue is aggrieved is that the a....

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....of tax, the assessee should inform the Central Excise officer in writing about such payment, and then the Central Excise officer shall not issue any SCN under section 73(1) in respect of service tax so paid. Explanation -2 to Section 73(3) also provides that no penalty under any provisions of the Finance Act or the rules made there under shall be imposed in respect of such payment of service tax along with interest. 49. In the instant case, the short payment / non-payment of service tax has been ascertained by the Central Excise Officer in course of investigation conducted against the assessee. The assessee has also paid whole the amount of Service Tax along with interest. I further find that the CBEC vide letter No.137/167/2007-CX....