TaxTMI 
TaxTMI 
2018 (8) TMI 252
X X X X Extracts X X X X
X X X X Extracts X X X X
....keep of the aircraft was the responsibility of the appellant. For these services, the appellant received certain amounts as per the terms and conditions entered into with the chartering parties. The agreement included the route, and the estimated flying cost which was determined on the basis of the flying time. There were other components of the charge such as landing charges, parking charges etc. No tickets were issued for such journey. The Department was of the view that the activity carried out by the appellant was liable to service tax under the category of "Supply of Tangible Goods Service" (STGS) taxable under Section 65(105)(zzzzj) of the Finance Act, 1994. The impugned order decided two show cause notices. First show cause notice dated 21.03.2011 covering the period May, 2008 to March, 2010 and second show cause notice dated 24.04.2012 covering the period April, 2010 to March, 2011. The claim of the appellant before the lower authorities was that the activity will be liable to service tax only under the category of 'Transportation of Passenger by Air' within India under Section 65(105)(zzzo), which became liable for payment of service tax for journey within India only w.e.f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....heir helicopter to their client on charter hire. Further, the helicopter was required to be kept in readiness and maintenance only by the appellant. Further, the amount charged is not on the basis of per passenger and no tickets are issued. Agreement clearly shows that the activity is for leading of helicopter and not for 'Non-scheduled Air Transportation'. He also relied on the following case laws: i) Hari Singh vs. State of Haryana -1993 (66) ELT 23 (SC) ii) Global Vectra Helicop Ltd. vs. CST, Mumbai-II 2016 (42) STR 118 (Tri. Mumbai). iii) CCE, Visakhapatnam vs.Mehta & Co.-2011 (264) ELT 481 (SC) (iv) Mathania Fabrics vs. CCE, Jaipur-2008 (221) ELT 481 (SC) 5.1 After hearing both sides and on perusal of record, we find that the dispute is whether the activity carried out by the appellant will fall under the category of STGS under Section 65(105)(zzzzj) or under Section 65(105)(zzzo) under the category of 'Transportation of Passengers by Air' within India. The appellants' contention is that the activity will be covered under the latter and accordingly they have commenced payment of service tax w.e.f. 01.07.2010 under the latter category. The concurrent finding of b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....action which is under dispute. 6.1 From the preamble of the contract entered into by the appellant with M/s. ONGC, it is seen that ONGC was interested in charter hiring of helicopters for offshore operations being carried out by them and the appellant agreed to provide the required services against the Corporation's order in this regard. As per clause 3 of the agreement the appellant undertook to deliver/mobilize the helicopters at charterer's helibase in Mumbai or at other bases in India as may be designated by the charterer in fully operational condition for the charter service. In clause 4 relating to service, it was provided that the appellant shall ensure that the helicopters are available and fully operational for the exclusive use of the charterer and the persons authorized by the charterer and the daily flight schedule was to be provided by the charterer. The contract also envisaged that the appellant shall provide experienced IFR licensed aircrews for the operation and qualified maintenance crews for servicing of the helicopters as per the prescribed standards. Passengers and/or cargo as required by the charterer was to be carried in the helicopter. All necessary cleara....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for use by the clients. Therefore, the services rendered by the appellant to their clients in respect of charter-hire of helicopters would come under the purview of supply of tangible goods for use as defined in Section 65(105)(zzzj) of the Finance Act, 1994. 6.3 The Hon'ble Apex Court in the case of Super Poly Fabriks Ltd. v. Commissioner - [2008 (10) S.T.R. 545 (S.C.)], laid down the principle of how to read an agreement or contract as under :- "There cannot be any doubt whatsoever that a document has to be read as a whole. The purport and object with which the parties thereto entered into a contract ought to be ascertained only from the terms and conditions thereof. Neither the nomenclature of the document nor any particular activity undertaken by the parties to the contract would be decisive." If this principle is applied in reading the contracts entered into by the appellant with their clients, it is seen that the contract is for charter-hiring of the helicopters and not for flying of passengers/cargo. 6.4 The Hon'ble High Court of Bombay, in a case of charter hiring of vessel for offshore oil operations, considered an identical issue in Indian National Shipowners ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ers of the 1st petitioner cannot be brought to tax under that entry. .................................................................... 48. Applying the above conclusions to the instant case, we hold that the services rendered by the members of the 1st petitioner are either pre-mining or post-mining activities. They have no direct relation to mining. They were, therefore, rightly not brought to tax till entry (zzzzj) was introduced to cover transport of tangible goods by sea without transferring right of possession and effective control thereof. The services rendered by the members of the 1st petitioner are covered by entry (zzzzj) because they inter alia supply vessels, offshore support vessels, barges, tugs etc. without transferring right of possession and effective control over them. In contrast entry (zzzy) was introduced to comprehensively bring under the service tax net activities having a direct nexus to mining activities. Entry (zzzzj) is not a carve out of entry (zzzy). Both entries are independent. Entry (zzzzj) was not inserted into the Finance Act by amending entry (zzzy). It is not possible to invent a remote connection of the services rendered by the members o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for the purpose of mobilizing and demobilizing of personnel of third party companies and for movement of their freight and/or equipment. Under the agreement, Heligo would reimburse the actual costs incurred by the assessee in sourcing and acquiring spares for maintenance of the helicopter. The necessary infrastructure for maintenance of the helicopter would also be provided by Heligo. The entire cost of insurance to cover all liabilities in respect of passengers, cargo, crew, helicopter and third party would be incurred by the assessee and reimbursed to them by Heligo. Heligo would also pay monthly remuneration to the pilots of the assessee. They would also bear the costs of maintenance of the helicopter and also the costs of fuel and consumables required for its operation. On a perusal of the charter-hire agreement between the assessee and Heligo, we find that Heligo chartered/hired the helicopter for their exclusive use and they incurred the entire costs of operation and maintenance of the helicopter and even the cost of insurance to cover all liabilities. One significant term of the contract was that the "helicopter shall be utilized solely for the purpose of providing the serv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....] "Scheduled air transport service" has been defined under Rule 3(49) of the Aircraft Rules, 1937 and the same reads as under :- "Scheduled air transport service" means air transport service undertaken between the same two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognisably systematic series, each flight being open to use by members of the public," [underlining added] The learned counsel for the appellants has argued that two distinct requirements have to be satisfied by an air transport service to be called "scheduled air transport service". According to him, the two essential requirements are the following : (a) there must be regular or frequent flights or flights operated according to a published time table between the same two or more places; (b) each flight must be open to members of the public. The learned counsel has argued that any air transport service that does not meet the above two requirements will be a non-scheduled (passenger) service. On this basis, it has been claimed that the assessee was providing "non-scheduled (passenger) service" under the permit granted by DGCA ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....any other purpose without the prior consent of Heligo. They did not have any control over the manner in which the helicopter was used by Heligo (who professedly entered into charter contracts with "third party companies" in respect of the aircraft which was accordingly used for transporting the personnel of these companies) and the copter operations were not open to members of the public. Where the helicopter would not come within the meaning of "passenger aircraft", the flight operations cannot be called "non-scheduled (passenger) services". The ratio of the above decision would apply squarely to the facts of the case before us. As can be seen, the service provided by the appellant cannot be covered by transport of passengers by air service since in that case, the definition specifically provides that the service is in relation to scheduled or unscheduled air transport of passengers. The thrust in the definition is on transport of passengers. In the case of the appellant, the service is provided to various companies, who chartered the aircraft for specific time or for specific journey. The payment is not based on number of passengers. No tickets are issued to the passengers and....