AI Drafter 
TaxTMI 
TaxTMI 
2018 (9) TMI 921
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....ices under the category of supply of tangible goods, for which they neither took any Service Tax Registration nor did they paid any service tax on the said activity. Resultantly, show cause notice dated 21st December, 2010 was served upon them demanding Service Tax under the category of supply of tangible goods for the period w.e.f. May, 2008 to May, 2010, alongwith the interest and the proportionate penalties. The said show cause notice was adjudicated initially vide order dated 24th January, 2012 thereby confirming the said demand. Being aggrieved thereof, an appeal was filed before the Commissioner (Appeals) who has upheld the said order and rejected the appeal. Being aggrieved, the present appeal has been filed. 2. We have heard Mr.Narasimhan, ld. Counsel for the appellant and Mr. Vivek Pandey, ld. D.R. for the Department. 3. It is submitted on behalf of the appellant that the appellant own two Aircrafts/Helicopters, which are being provided by them on chartered hire basis. Hence, in fact they are providing the Aircraft Operator Services and such services for the domestic region came into tax net w. e. f. 1st June, 2010. The service of the appellant falls under the cat....
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....erator, in relation to scheduled or non-scheduled air transport of such passenger embarking in India for domestic journey or international journey;" 5.2 Supply of tangible goods for use service is defined under Section 65 (105) (zzzzj) of the Act which reads as follows:- Section 65 (105) (zzzzj): "To any person, by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances." 5.3 Further the Department vide D.O.F. No.334/I/2008-TRU dated 29th Feb., 2008, issued clarification regarding the introduction of the levy of supply of tangible goods. The relevant portion of the said clarification is extracted hereunder for ready reference: 4.4. Supply of Tangible Goods for use: .......... 4.4.2. Excavators, wheels loaders dump trucks, crawler carriers companion equipment, cranes etc. offshore construction vessels & barges, geo-technical vessels, tug and barges flotillas, ring and high value machineries are supplied for use, with no legal right of possession and effective control. Transac....
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.... by both the sides. We have also perused the contracts/agreements entered into by the appellants in respect of the transaction 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 pe....
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....here is no dispute that helicopters were mobilized/delivered by the appellant to their clients without transferring the right of possession and effective control 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 charterhiring of the helicopters and not for flying of p....
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....ion of entry (zzzzj), the services rendered by the members of the 1st petitioner were not taxable. Creation of new entry is not by way of amending the earlier entry. It is not a carve out of the earlier entry. Therefore, the services rendered by the members 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 m....
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....ribunal, in the said case held as follows :- "24.6 The question now to be considered is whether the assessee used the imported helicopter for the avowed purpose. It is not in dispute that, under a "charter-hire agreement" dated 14-4- 2008 with Heligo, the assessee allowed the helicopter to be used by Heligo 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 c....
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....services" has been defined in clause (b) of Explanation to condition No. 104 and the same means "air transport services other than scheduled (passenger) air transport services as defined in Rule 3 of the Aircraft Rules, 1937." [Incidentally, we note that the expression "non-scheduled air transport services (passenger)" is defined in the same way in clause (2) of "Passenger CAR"] "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 publish....
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....pellants that they used the helicopter for public transport of passengers. They only allowed Heligo to hire the aircraft for a remuneration and use it for transporting employees of Oil & Gas/allied companies between Vishakapatnam airport and offshore oil/gas fields under contracts awarded to Heligo by those companies. The appellants were unable to use the copter (during the tenure of the agreement) for 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 definitio....
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....ces of charter hire of helicopters merits classification under supply of tangible goods for use services." Similar views have been expressed by the Tribunal in the case of M/s Mesco Airlines Ltd. vs. CST, New Delhi (F. O. No. 51387/2018 dt. 18.04.2018). 8. By following the decision of the Tribunal (supra), we order classification of the service under the category of STGS. Consequently, we uphold the confirmation of demand of service tax on merit. 9. Once the issue of classification is adjudicated the another issue of limitation is yet to be considered, as it being another ground of challenging the impugned order. It is apparent from the show cause notice dated 21.12.2010 that a demand for the period w.e.f. May, 2008 to May, 2010 has been raised. It becomes apparently clear that while issuing the said show cause notice, Department has invoked the longer time limit as mentioned in proviso to Section 73 of the Act. The law for invoking extended period of limitation is stated that the onus heavily rest upon the Department to prove the alleged suppression of facts. Perusal of entire record shows no such discharge on part of the Department, except merely raising the ora....