TaxTMI 
TaxTMI 
2024 (3) TMI 458
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....of service tax along with interest and penalty. 3. The principle issue involved in both the appeals is common, therefore disposed of by a common order. 4. The facts of the case in brief are that the intelligence gathered by the officers of DGCEI, Ahmedabad revealed that M/s Karnavati Aviation Pvt. Ltd. (Formerly known as M/s Gujarat Adani Aviation Pvt. Ltd.) is engaged in providing chartered flights to various organization but not paying appropriate Service tax payable thereon under 'Supply of Tangible Goods Services' as specified under Section 65(105)(zzzzj) of the Finance Act, 1944. Appellant was called to furnish information and documents. According to the Appellants, these services fall under the category of 'Air Transport of Passenger Service' as defined under Section 65(105)(zzzo) of the Finance Act , 1944. After completion of investigation, revenue contended that appellants had not issued tickets to passengers. They had produced copies of invoices issued to their clients such as M/s Adani Power Ltd., Mundra Port and SEZ Ltd., M/s SITC, etc. Therefore, the services provided by the appellants appeared to be not covered under 'Transport of Passenger by Air Service. However as....
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....nd in Charter Flight operations undertaken by the Appellant, the aircrafts has been used by the Appellant to transport passengers. Accordingly, by undertaking charter flight operations, the Appellants have rendered air transport service falling under the category of Non-Scheduled passenger Service. 7. He further submits that the Larger Bench has categorically held that the manner or mode of fixing the remuneration for such air transport service, whether seat wise, daily or weekly or annual basis is entirely irrelevant and does not detract from the service being air transport service. Since it is clear that by undertaking charter flight operations the Appellant has rendered air transport service which is not -scheduled passenger service, the same squarely falls under Section 65(105)(zzzo) and since under the said provision, domestic journey was not taxable prior to 01.07.2010, the Appellant has rightly not paid the service tax prior to 01.07.20210. 8. He also argued that even in Charter Flight operation, the Aircraft is used by the Appellant to provide the service of transportation of passengers, there is no supply of the aircrafts by the Appellant and hence Section 65(105)(zzzzj)....
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....ing' in such context means comprising and accordingly the term or expression comprises the things mentioned after the word including. 11. He further submits that in Section 65(105)(zzzzj), the things following the word 'including' are machinery, equipment and appliances which are covered by the ordinary connotation of the expression 'tangible goods' as there can be no manner of doubt the same are tangible goods. There is therefore no question of enlarging the meaning of 'tangible goods' by mentioning machinery, equipment and appliances after the words 'including'. The word 'including' in Section 65(105)(zzzzj) is therefore not a word of enlargement and in the context of Section 65 (105)(zzzzj) it must mean comprising. It therefore applies to supply of tangible goods comprising machinery, equipment and appliances. Such interpretation is placed beyond any doubt or controversy by the latter part of Section 65(105)(zzzzj) which provides for non-transferring of right of possession and effective control of such machinery, equipment and appliances. If the use of the word 'including' was to enlarge the scope of tangible goods and not to restrict the same to machinery, equipment and applia....
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.... reliance on the following judgments. (i) CCE Vs. Adecco Flexione Workforce solution Ltd. (ii) Jet Airways (I) Ltd. Vs. CST - 2016(44)STR 465 (iii) Essar Steel Ltd. Vs. CCE -2009(13)STR 579 15. He also submits that demand of service tax of Rs. 11,73,173/- under 'supply of tangible goods service' in respect of service received by the appellant from Kellet and Singleton Aviation is untenable in law. The service received by the appellant from Kellet and Singleton Aviation, who are located outside India, was of air transport service from Ahmedabad to Moscow and Back. The said Service falls under Section 65(105)(zzzo), which is excluded from Rule 3 under Sub-rule (iii)(a) of Taxation of Services(Provided from Outside India and received in India) Rules 2006, and is therefore not taxable. 16. Without prejudice, he also submits that services received from Kellet and Singleton Aviation was not one falling under Section 65(105)(zzzo), but was for supply of tangible goods falling under Section 65(105)(zzzzj), even so,the same is not taxable in view of the Proviso to Rule 3(iii) of Taxation of Services (Provided from outside India and received in India) Rules, 2006. Further as held in ....
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....stic journey or international journey. The appellants are registered with the Director General of Civil Aviation (DGCA) as an aircraft operator for providing the service of transport of passengers by aircraft. 'Aircraft Operator' as defined in Section 65(3b) of the Finance Act 1994 as under:- 'Aircraft operator' means any person, who provides the service of transport of goods or passengers by aircraft.' Further, 'Air transport service' is defined in Rule 3(9) of the Aircraft Rules, 1937 as 'a service for the transport by air of persons, mails or any other thing, animate or inanimate, for any kind of remuneration whatsoever, whether such service consists of a single flight or series of flights.' The Civil Aviation Requirements ('CAR') dated 1-6-2010 also provides a similar definition of 'Air transport service' both for Scheduled and Non-Scheduled services. 22. We also find that the the Civil Aviation Requirements ('CAR') dated 1-6-2010 relating to minimum requirements for grant of permit to operate non-scheduled Air Transport Services defines 'Charter operation' as under : '3.4 'Charter operation' is an operation for hire and reward in which the departure time, departure loca....
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.... Regardless of this the services remains one of charter operation. 24. In view of above, it is seen that the services rendered by the appellants fall within the category of non-scheduled air transport services. Further, the appellant is in the business of providing service to its customers embarking in India for domestic journey. Hence, the conditions for coverage under the 'transport of passengers by air service' are satisfied. Therefore, in our view the service provided by the appellant is covered under the taxable service category of 'transport of passengers by air service' defined under clause (zzzo) of sub-section 65(105) of the Finance Act, 1994. 25. We also find that the nature of the appellant's activity is also clear from the fact that they hold a permit for operating non-scheduled airtransport service granted by the Director General of Civil Aviation, that services of transportation of passengers by air within India became taxable u/s 65(105)(zzzo) of the Finance Act w.e.f. 1-7-2010, that prior to 1-7-2010 only the airtransport of passengers embarking in India for international journey in any class other than economy class was taxable and only w.e.f. 1-7-2010 the domest....
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....ispute. The assessee has paid both the service tax and interest for delayed payments before issue of show cause notice under the Act. Sub-sec. (3) of Section 73 of the Finance Act, 1994 categorically states, after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under sub-sec. (1) in respect of the amount so paid. Therefore, authorities have no authority to initiate proceedings for recovery of penalty under Sec. 76 of the Act. 3. Unfortunately the assessing authority as well as the appellate authority seem to think. If an assessee does not pay the tax within the stipulated time and regularly pays tax after the due date with interest. It is something which is not pardonable in law. Though the law does not say so, authorities working under the law seem to think otherwise and thus they are wasting that valuable time in proceeding against persons who are paying service tax with interest promptly. They are paid salary to act in accordance with law and to initiate proceedings against defaulters who have not paid service tax and interest in spite of service of notice calling upon the....
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....e category of 'Transportation of Passengers embarks in India for International Journey by Air Services' defined under Section 65(105)(zzzo) and not under the category of 'Supply of Tangible Goods Services' 29. Without prejudice, we also find that on the said services appellant also not liable for payment of service tax under the taxable category of 'supply of Tangible Goods Service'. The said service falls under Section 65(105)(zzzzj), which is excluded from Rule 3 under Sub-rule (iii)(a) of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 which provided as under : 'Provided that where the taxable service referred to in sub-clause (zzzzj) of clause (105) of section 65 of the Act is received by a recipient located in India, then such taxable service shall be treated as taxable service provided from outsideIndia and received in India subject to the condition that the tangible goods supplied for use are located in India during the period of use of such tangible goods by such recipient.' In the present case Kellett provided the Aircrafts for transportation of passengers from Ahmedabad to Moscow. The Appellant used the services received from Kelle....
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....ortion of the charter period, whether long term or short term, the tankers are in transit on the high seas and come to the shore only for loading of LNG (outside India) and unloading LNG (in India). All other operations of the tankers is outside India, either in the high seas beyond the territorial limits of India or in another country. As the tankers (tangible goods) supplied for use of the assessee cannot be said to be located in India during the period of use of such tangible goods, the transactions fall outside the purview of the proviso. (iii) The assessee also contended that the 2006 Rules classified the taxable services considered therein into three categories and specified distinct criteria for each of the categories, subject to exceptions specified. For services falling under Rule 3(ii), performance of the service In India is the specified criterion. The first proviso to this sub-rule states that where a part of the service is performed in India, the whole of the service shall be treated as performed in India. STGU is not one of the taxable services covered by Rule 3(ii). (iv) STGU is considered only in the proviso to Rule 3(iii). It is therefore impermissible to read ....
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....inct design of the several distinct provisions in Rule 3, and exclusive treatment of various taxable services therein, it is impermissible to read the stipulation of one clause of this rule into another. The proviso to Rule 3(iii) is therefore, on a true and fair construction of the provisions of Rule 3, a stand-alone provision specifically and exclusively applicable to the taxable STGU. Accordingly, tangible goods supplied for use must be located in India during the period of use of such goods by the recipient, for the charge of service tax to apply under the reverse charge mechanism enjoined by Section 66A. (ix) 'Located in India during the period of use of such tangible goods' is the governing criterion for applicability of the reverse charge mechanism in the case of STGU. The expression 'during' does not occur in isolation but occurs in the company of the other expression 'located in India'. Applying the principle of noscituorasociis, the inference is compelling that for the charge of service tax to apply the tangible goods must be located in India during the entire course of their use. (x) In the case of the LNG tankers, undisputedly a substantial period of their use by th....
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....on 12-4-2009. On 13-4-2009, the Assistant Commissioner (Anti-Evasion Division) sought further information/documents. These were furnished on 27-5-2009. On 22-6-2009, personal appearance of the authorised representative of the appellant was called for recording a statement on 29-6-2009. The statement was recorded on 26-6-2009 under Section 14 of the Central Excise Act, 1944. On 28-8-2009, the assessee received a detailed legal advice from a Senior Advocate clearly advising that no service tax is leviable on the hiring charges paid by the assessee for hiring the tankers. On 9-9-2009, the assessee addressed the Department, informing about the legal advice; asserting that there is no liability to service tax and requested dropping of proceedings. On 7-10-2009, the Commissioner, Service Tax addressed the assessee appreciating its initiative in depositing service tax under protest and stated that discharge of service tax would also obviate the need for issuing a show cause notice or invoking penal provisions and requested details of service tax deposited. On 15-10-2009, the assessee addressed the Superintendent, Service Tax, New Delhi intimating deposit of specified amounts of service ta....