TaxTMI 
TaxTMI 
2023 (7) TMI 949
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.... the process of rendering the service, the appellant also collects excess baggage charges when the weight of the baggage of the passenger is in excess of the permissible weight. The dispute that arises in the present appeal is with respect to the levy of service tax on such excess baggage charges collected by the appellant from the passengers. 4. The impugned order dated 26.07.2016 adjudicates two show cause notices dated 18.09.2012 and 06.05.2014. The show cause notice dated 18.09.2012 mentions that the appellant had collected excess baggage charges during the period 2007-08 to 2011-12 on which service tax amounting to Rs. 1,64,25,588/- was leviable but it was not paid. The service that was alleged to have been rendered by the appellant was mentioned as transport of passengers embarking in India for International journey by air service, made taxable under section 65(105)(zzzo) of the Finance Act. The show cause notice dated 06.05.2014 mentions that for the period 2012-13, the appellant would be required to pay service tax amounting to Rs. 23,12,067/- for the reasons stated in the earlier show cause notice dated 18.09.2012. 5. The appellant filed a reply to both the show cause no....
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....482) July 2012 6,78,265 33,533 33,534 1 August 2012 35,78,456 1,76,919 1,76,910 (9) September 2012 31,12,561 1,53,885 1,53,878 (7) October 2012 16,16,692 79,929 79,932 3 November 2012 16,83,964 83,255 83,256 1 December 2012 25,50,449 1,26,094 1,26,090 (4) January 2013 29,90,914 1,47,871 1,47,873 2 February 2013 20,64,130 1,02,044 1,02,051 7 March 2013 17,66,661 87,340 87,346 6 Total 2,67,22,789 13,21,164 9,90,870 (3,30,294) 7. The adjudicating authority noticed that what had to be determined was whether the service provided by the appellant would fall under 'transport of passenger by air service' or 'transport of goods by air service' and after consideration of the factual position and the legal position observed that the service would fall under transport of passengers by air. The observations are as follows:- "6.11.1 ***** All these explanations suggest that the additional charges collected by the noticee on account of excess baggage are not included in the airfare initially collected by the noticee, but are above the airfare collected by them. In view of the discussions, I do not agree with the contention of the noticee t....
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....rs at the rate prescribed under Section 66 of the Finance Act, 1994 for the period prior to 01.07.2012 and at the rate prescribed under Section 66B of the Act w.e.f. 01.07.2012." (emphasis supplied) 9. The Principal Commissioner also rejected the contention of the appellant that excess baggage charges collected from business class passengers were only leviable to service tax. The Principal Commissioner, therefore, held that the bifurcation chart of the appellant showing excess baggage charges attributable to the total number of economy and business class passengers would have no relevance. 10. The contention of the appellant that in any view of the matter the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act could not have been invoked was also rejected. The Principal Commissioner, after noticing that mere suppression of facts was not sufficient unless there was intent to evade payment of service tax, recorded the following findings:- "8.3 I find that the extended time period of five years is invokable under the provisions contained in proviso to Section 73(1) of the Finance Act, 1994 as amended in specified cases. I find that th....
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....d as well as for imposing penalty. In any case, the noticee, in this case, has willfully contravened the provisions of the Service Tax Rules, 1994. ***** 8.9 All these facts narrated above go to show that the noticee suppressed the facts, by non-compliance of the obligations cast upon them by the statutory provisions. The suppression of the facts clearly gives the conclusion that the party had intention to evade the tax. It was imperative to mention here that suppression with intent to evade payment of tax need not require to be proved with mathematical precision in the regime of self-assessment, where assessment has to be made by the party himself without any control of the Department. Therefore, for the purpose of invoking the extended period, the intent to suppress material facts by the noticee clearly stands established." (emphasis supplied) 12. The Principal Commissioner ultimately held that the extended period of limitation was correctly invoked and the finding is: "8.15 In view of the above discussions, I hold that the extended period as provided in proviso to Section 73(1) of the Act has rightly been invoked in the case of first SCN dated 18.09.2012 and due Service....
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....l for the appellant relied upon the decision for the Tribunal in Jet Airways India Ltd., Kingfisher Training and Aviation Services Ltd. vs. CCE [2015 (40) STR 1159 (Tri.Mum.)] as also the decision of the Tribunal in M/s. Thai Airways International Public Company Ltd. vs. Commissioner of Service Tax New Delhi [2018-TIOL-1472-CESTAT]. Learned counsel also pointed out that the Civil Appeal filed by the department to assail the decision of the Tribunal in Jet Airways was dismissed by the Supreme Court holding that there was no merit in the appeal. The decision is reported in 2016-TIOL-210-SC-ST [Commissioner of Service Tax, Mumbai-I vs. Jet Airways India Ltd. Etc.]. 18. Shri Harshvardhan, learned authorised representative appearing for the department also placed reliance upon the decision of the Tribunal in Jet Airways to contend that the Principal Commissioner committed no error in holding that the services rendered by the appellant would appropriately fall under transport of passengers by air services and not under transport of cargo by air services. Learned authorised representative also reiterated the findings recorded by the Principal Commissioner and submitted that the extended ....
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....e as follows: "19. It is seen that the service of goods transportation is defined under Section 65(105)(zzn) as "any service provided or to be provided to any person by aircraft Operator in relation to transport of goods by aircraft." When the excess baggage charges are paid by passengers separately, they are being provided a service of transportation of goods by Air. This is what the statute clearly and unambiguously provides. This activity of carriage of excess baggage is distinct and separately identifiable and therefore no occasion arises for clubbing this service with the service of transportation of passengers. It is only the free baggage allowed with the passenger ticket that can be called as incidental to the transportation of passengers because no separate charges are levied for free baggage. It is incidental because the free baggage is apparently included in the cost of the ticket. But when the transportation of excess baggage is being charged separately and is being paid for distinctly and separately and is also specified as a service, the question of calling this activity as incidental does not arise. Merely because two services are being provided simultaneously but d....
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....t the excess baggage charges collected by the appellant is an integral part of the main service namely transportation of passenger by air therefore, the demand is to be set aside? OR Whether Member (Technical) is correct in holding that the excess baggage charges are required to be taxable under the category of transportation of goods by air craft? 2. Whether in the facts and circumstances of the case the Member (Judicial) is correct in holding that extended period of limitation is not invokable therefore the demand for the extended period of limitation is to be set aside? Or Whether Member (Technical) is correct in holding that in the facts and circumstances of the case extended period of limitation can be invoked consequently the demand confirmed by the impugned order is to be confirmed? 3. Whether in the facts and circumstances of the case penalties on the appellants can be imposed as held by Member (Technical)? Or Penalties cannot be imposed as held by Member (Judicial)." 24. The learned Third Member, to whom the matter was referred, agreed with views expressed by the learned Member (Judicial) on all the three issues and the relevant observations made in the order....
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....view of the majority opinion appeals are allowed." 26. The Division Bench of the Tribunal in Thai Airways followed the decision rendered by the Tribunal in Jet Airways and observed as follows:- "6. With regard to collection of Excess Baggage Charges by the appellant from the customers, we find that the said amount was collected from the passengers for carrying extra luggage above the normal level prescribed by the airlines. Such charges does not fall under any of the category of defined taxable service for the purpose of levy of service tax. Since, such charges collected by the appellant are in relation to or in connection with transport of passengers by air service, the service tax demand cannot be confirmed under any other category of service. Upon analysis of the scope of the taxable service vis-à-vis. the excess baggage charges collected by the assessee, the Tribunal in the case of Kingfisher Airlines Ltd / Jet Airways Ltd. (supra) has held that collection of such charges is an integral part of the main service and cannot be separately taxed under any other heads of service. 27. Thus, in view of the aforesaid decisions, it has to be held that the collection of amount....
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....hat under the self assessment procedure the party is required process on its own the tax due on the services provided, but as the appellant had failed to discharge this burden the appellant had willfully and deliberately suppressed facts so as to avoid liability towards payment of service tax. The extended period of limitation according to the Principal Commissioner was, therefore, correctly invoked. Surprisingly, in the subsequent paragraph no's. 8.7 and 8.9, the Principal Commissioner went on to observe that the extended period of limitation can be invoked even if there is no intent to evade payment of tax. 32. There is substance in the contention advanced by the learned counsel for the appellant that mere suppression of fact is not enough as it has also to be conclusively established that suppression was wilful with an intent to evade payment of service tax. 33. It is correct that section 73 (1) of the Finance Act does not mention that suppression of facts has to be "wilful' since "wilful' precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression "wilful" before "suppression of facts" under section 73(1) of the Finance Act, suppres....
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....from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of court the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression." (emphasis supplied) 36. This decision was referred to by the Supreme Court in Anand Nishikawa Company Ltd....
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....42/2018 decided on 06.04.2023] and the relevant observations are reproduce below: "32. As noted above, the impugned show cause notice discloses that the respondents had faulted MTNL for not approaching the service tax authorities for clarification. The respondents have surmised that this would have been the normal course for any person acting with common prudence. However, it is apparent from the statements of various employees of MTNL that MTNL did not believe that the amount of compensation was chargeable to service tax and therefore, there was no requirement for seeking clarifications. Further, there is no provision in the Act which contemplates any procedure for seeking clarification from jurisdictional service tax authority. Clearly, the reasoning that MTNL ought to have approached the service tax authority for clarification, is fallacious. 33. It is also important to note that MTNL had declared the receipt of compensation as income in its books of accounts. The final accounts of MTNL are in public domain. In the circumstances, the allegation that MTNL had suppressed any material facts from the Service Tax Department is wholly without any basis. 34. Mr. Harpreet Singh,....
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....not taxable under the Act is a substantial one. No intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return. 42. We agree with the contention that the impugned show cause notice was issued beyond the period of limitation and is, thus, liable to be set aside." (emphasis supplied) 39. The Principal Commissioner, therefore, fell in error in observing that the extended period of limitation could be invoked even if there was no intent to evade payment of service tax. 40. The Principal Commissioner also fell in error in holding that the extended period of limitation could be invoked in the present case because under the self-assessment procedure parties are required to process on their own tax dues on the services provided but since the appellant had failed to discharge this burden, the appellant had willfully and deliberately suppressed facts so as to avoid payment of service tax. 41. It needs to be noticed that the appellant had in reply to the show cause notice specifically asserted that nothing had been suppressed in the ST-3 returns and that service tax audits had been conducted and the factual position was also duly examined by the audit....
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....s the 'Best Judgment Assessment' under section 72. This provision is similar to the provision for re-assessment under Section 17 (4) of the Customs Act, 1962. The Commissioner imagined that wrong self-assessment by an assessee would amount to deliberate mis-declaration and suppression of facts with intent to evade. As per the Finance Act, 1994, if the assessee wrongly self-assesses tax in its returns and none of the five elements required to invoke extended period of limitation is present and if the demand gets time-barred, the responsibility for it rest squarely on the officer who had the jurisdiction and the mandate to the Best Judgment assessment under section 72 but has not done so and NOT on the assessee. Therefore, the invocation of the extended period of limitation cannot be sustained." (emphasis supplied) 43. This apart, the learned Member (Judicial) in Jet Airways had observed that since the issue of classification of the service on the basis of various judicial pronouncement was debatable, the extended period of limitation could not have been invoked. Though the learned Member (Technical) did not agree with this view, but the learned Third Member (Judicial) to whom the....