TaxTMI 
TaxTMI 
2022 (1) TMI 1016
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..... 2. In regard to the first show cause notice, the Additional Commissioner confirmed the demand of service tax amounting to Rs. 23,84,477/- under section 73 of the Finance Act, 1994 [the Finance Act] and appropriated an amount of Rs. 23,48,061 already deposited by the appellant. Interest under section 75 of the Finance Act and penalties under sections 77(1)(a) and 77(2), and section 78(1) of the Finance Act were also imposed. 3. In regard to the second show cause notice, the Additional Commissioner confirmed the demand of service tax amounting to Rs. 5,35,032/- under section 73 of the Finance Act and appropriated an amount of Rs. 5,35,032/- deposited by the appellant. The Additional Commissioner also ordered for levy of interest under section 75 of the Finance Act and penalties under sections 77 (1)(a) and 77(2), and 76 of the Finance Act. 4. The Commissioner (Appeals) dropped the levy of interest in regard to both the show cause notices, but confirmed the imposition of penalty under sections 77(1)(a) and section 77(2) of the Finance Act. 5. The appellant is in the business of imparting training and coaching to individuals in the field of flying aircrafts for obtaining ....
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....The definition of "passenger‟ in section 65(77c) was also amended on 01.07.2010. 11. Prior to 01.07.2010, the definition of "passenger‟, as contained in section 65(77c), is as follows: "(77c) "passenger" means any person boarding, at any customs airport, an aircraft for performing an international journey, but does not include- (i) a person who has arrived at such customs airport from a place outside India and is in transit through India, provided that he does not pass through immigration and does not leave customs area and continues his journey to a place outside India; and (ii) a person employed or engaged by the aircraft operator in any capacity on board the aircraft;" 12. After 01.07.2010, the definition of "passenger‟ is as follows: "(77c) "passenger" means any person boarding an aircraft in India for performing domestic journey or international journey." 13. STG, which become a taxable service w.e.f. 16.05.2008, is defined in section 65 (105)(zzzzj) to mean: "Section 65(105)(zzzzj): "taxable service" means any service provided or to be provided to any person, by any other person, in relation to supply of tangible goods including machi....
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....clearly indicate that an aircraft/helicopter has been hired out to one Mr. Ali...... for consideration of Rs. 3,84,000/-. A plain perusal of both these invoices, show that the Appellant have actually issued the said invoice for hiring out the aircraft/helicopter to particular person/organization and the amount charged in the invoice is lump-sum irrespective of number of passengers because the said invoices nowhere carry any such detail. I have also gone through other invoices which are not easily readable, yet, from the legible part of these invoices one could find out that these invoices also do not contain any details of the passengers. From the foregoing it appears to be a simple case of hiring of Aircraft on certain charges to be paid by the charterer who was not entitled to have the Aircraft under its control and risk during the term of the lease/hiring since exclusive possession and effective control of the said Aircraft is not transferred to the charterer during the term of the lease/hiring as is discussed in the foregoing paras." (iii) I find that the facts of the case when analyzed in the context of the contents of the above circular and definition given under Sectio....
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....ayment of the said Service Tax under a different category of taxable service. In the given scenario, as the records say, no Service Tax was recoverable from the appellant and that the entire amount of Service Tax has been discharged on timely basis by the appellant, penalties imposed upon the appellant under Section 76 and 78 are not justified." (v) "However, as is evident from the Grounds of Appeal, the appellant has stated that with effect from 01.07.2010, the Appellant started paying the Service Tax by classifying the same under transport of passengers by Air Services (TPA) and not under supply of Tangible Goods Services (STGU) as is observed by the department. It, thus becomes apparent that initially, in order to seek refund of the amount already paid for the previous period (2009-10 and 2010-11 i.e. from 01.04.2009 to 30.06.2010), they classified their services under a wrong head (transport of passenger by air service/TPA) and stuck with the same later on. When the department's view was made clear to the Appellant, the insistence on their part to deliberately classify their services under a different head shows their intention of escaping their liability for the previou....
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....010 and, therefore, the appellant started classifying the service under a different category in order to seek refund for the tax paid for the past period and also continued to classify the service under a wrong head even after the view of the Department was made known to the appellant. The appellant would, therefore, be liable to pay interest section 77(1)(a) and section 77(2) of the Finance Act. 17. Shri Anil Sood, learned counsel for the appellant assisted by Shri Sameer Sood, made the following submissions: (i) The intent and spirit of imposition of tax is to levy service tax on passengers opting to fly by air, the Department cannot, therefore, levy tax on the aircraft operator under STG service in view of the provisions of section 65A and Section 66F of the Finance Act. In support of this contention reliance has been placed on the decisions of the Supreme Court in Commissioner of Central Excise, Cus. & S.T. vs. Federal Bank Limited [2016 (42) S.T.R. 418 (S.C.)], Commissioner of C. Ex. & Cus., Kerala vs. Larsen & Toubro Ltd. [2015 (39) S.T.R. 913 (S.C.)] and the decision of the Delhi High Court in Airport Retail Pvt. Ltd. vs. Union of India; (ii) Taxability cannot be ba....
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....r the category of STG w.e.f. 16.05.2008. 21. The finding recorded by both the adjudicating authority and the appellate authority is that the appellant had supplied aircraft/helicopter belonging to the appellant to various entities on the terms and conditions mutually agreed upon and while providing the helicopter/aircraft on charter the appellant had provided its own pilot and other flying staff and kept the effective control and possession over the said helicopter/aircraft with itself. It is for this reason that the services provided were categorized under STG w.e.f. 16.05.2008, which also continued to remain taxable w.e.f. 01.07.2012. 22. The contention for learned counsel for the appellant is that the services were actually rendered to the passengers as it is they who were transported in relation to non-scheduled air transport by the aircraft operator. 23. This submission of learned counsel for the appellant cannot be accepted. It has been found by the Commissioner (Appeals), on a perusal of the various invoices, that it was the aircraft/helicopter that was hired against money consideration which was a lump-sum amount irrespective of the number of passengers, as even th....
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....vice is capable of differential treatment for any purpose based on its description that the most specific description shall be preferred over a more general description. In any view of the matter, the most specific description of the service rendered by the appellant is STG. The decisions relied upon by learned counsel for the appellant on this aspect would, therefore, be of no help to the appellant. 27. The issue was also considered by the Tribunal in Global Vectra Helicorp Ltd. The Member (Technical) held that the services rendered by the appellant therein for charter hire of helicopters to various corporates was classifiable under STG and imposition of penalties under section 76 and 77 was upheld. In coming to the aforesaid conclusion, the Member (Technical) noted that the contract between the appellant and ONGC was for charter hiring of helicopters for offshore operations and the appellant agreed to provide the required services. The Member (Technical) also noticed that the helicopters were operated by the crew provided by the appellant and such crew had complete control over the actual flying operations and for the services that were rendered consideration was also paid to ....