TaxTMI 
TaxTMI 
2026 (7) TMI 1448
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....vices viz., Tour operator, renting of immovable property services, Business Auxiliary Services, Pandal or Shamiana Services and Supply of Tangible Goods Services [SOTG] as defined under the provisions of the Finance Act, 1994. Intelligence was gathered that the appellant was supplying the Aircraft/Helicopter belonging to/owned by them to various entities for their use. The said services were being rendered as per the Agreements entered with the service recipients on mutually agreed terms and conditions. While providing the said aircraft/helicopter on charter hire, the appellant provided the crew thereby keeping an effective control and possession of the said the aircraft/helicopter with them. The Department opined that the said activity was in the nature of taxable service under the category of SOTG which was brought into tax net with effect from 16.05.2008. The appellant was also registered for rendering the said service. The Department alleged that the appellant had not paid service tax on the full consideration received for providing the aircrafts/helicopters. Summons/letters were issued by the department and the respective responses submitted by the appellants based whereupon t....
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....dit of Rs. 16,59,225/- for payment of service tax. Alleging that no proper bifurcation was provided by the appellant, service tax amounting to Rs. 4,29,29,520/- was proposed to be recovered along with along with interest at the appropriate rate alongwith proportionate penalties. 4. Show Cause Notice- (ii) 4.1 This SCN acknowledged the issuance of the earlier SCN dated 23.10.2013 and was in continuation thereof. Various summons/letters of the department and the respective responses submitted by the appellants are as follows: Sr. No. Date of Summon/ Letter sent by the department Date of Reply/ Response of the Appellant 1 30.01.2014 11.02.2014 2 25.02.2014 28.02.2014 3 01.04.2014 29.04.2014 4 21.01.2015 & 03.02.2015 06.02.2015 5 19.02.2015 03.03.2015 6 25.06.2015 & 06.07.2015 14.07.2015 7 07.10.2013 10.10.2013 4.2 The department sought details regarding the payment of service tax against the issues covered under the SCN-1 specifically in relation to supply of aircraft on hire basis to various entities for cha....
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....per Service etc. Ld. Counsel impressed that the respective revenue from all such services was clearly reflected in the Service tax returns filed by them. Similarly, on the input side, their expenses in foreign exchange pertained to several heads such as purchase and repair of spare parts, security deposit for the helicopters taken on lease, rent pertaining to DRY LEASE etc. b. That despite producing all related information and documents including bifurcation of income and expenditure into different heads, invoices pertaining to the CENVAT credit and, Bill of Entries.Agreements etc. pertaining to the purchase of goods, repair of spare parts, lease payments etc. to the Department from time to time throughout from 2009 to 2015 and also during the adjudication process for the Show Cause Notices, the demand was confirmed in the impugned order disregarding the submissions made and documents submitted by the Appellant without giving any reasons. Learned counsel contended that the mechanical clubbing of entire operational revenue as SOTG and entire forex as Management, Maintenance and Repair Service chargeable to RCM was factually incorrect and legally unsustainable. H....
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....2) STR 118) and Mesco Airlines Ltd. vs. CST, Delhi-(2018 TIOL 1761 CESTAT DEL) wherein CBEC Circular No. 20/2009 was interpreted to conclude that services will be rightly classified under SOTG. A perusal of the Order of this Tribunal in Re Karnavati Aviation and subsequent judgments inRe Deccan Charters and EON Aviationclearly invalidate the said findings and the clarificatory circular. Moreover, those decisions i.e. re Global Vectraand re Mesco Airlines have been turned down as bad law by this Hon'ble Tribunal in case of EON Aviation Pvt. Ltd. vs. Commissioner of Service Tax (supra). f. The legislature subsequently expanded a distinct taxable service for "transport of passengers by air", for domestic passengers w.e.f. 01.07.2010, which was not carved out of the entry of SOTG but created as an independent charging provision. It is well settled that where a specific taxable service is introduced, the same activity cannot be artificially brought within the scope of a general entry for the earlier period, as held by the Supreme Court in Commissioner of Central Excise & Customs vs. Larsen & Toubro Ltd.- (2015 (39) STR 913 SC) and Union of India vs. Martin Lottery Agencies Ltd-....
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....levant period, the Department was in continuous correspondence with the Appellant, and the Appellant had furnished all information, documents and clarifications as and when called for. Thus, allmaterial facts were fully within the knowledge of the Department and there was complete transparency in the conduct of the Appellant.In such circumstances, the allegation of suppression is wholly untenable. b. The Supreme Court has consistently held that "mere non-payment of tax does not amount to suppression and something positive is required for Invoking the extended period" (Uniworth Textiles Ltd. v. CCE), and that suppression must be willful with intent to evade duty" (Cosmic Dye Chemical v. CCE). In Pushpam Pharmaceuticals Co. v. CCE has further clarified that the term "suppression of facts must be construed strictly and means a deliberate act of withholding information. 7.1 Learned counsel also mentioned that the impugned demand was liable to be set aside on the ground of limitation alone. Specifically, the demand of 4,58,76,631/-under SCN dated 23.10.2013 (SCN-1), covering period of FY 2008-09 to FY 2011-12, forming the substantial portion of the impugned demand was ....
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....ioner Service Tax, New Delhi II - (2022 1 TMI 1016 CESTAT Delhi) 8.2 Ld. Authorized Representative further submitted that the benefit of exemption under Section 64(1) was not available to the appellant as claimed by them, in respect of the charter hire service provided in the State of Jammu & Kashmir because the service provider and the service recipient were established and registered business entities based in Delhi and engaged in the charter hire business. As regards the demand of service tax on Maintenance and Repair Service, under Reverse Charge, Mechanism, learned AR submitted that the Appellants could not corroborate their claim with the sufficient documentary evidence, that the foreign expenditure pertains to the non-taxable activities, As for the denial of CENVAT credit, it was reiterated that the credit was irregularly availed or utilized without proper documents. 9. We have heard the rival contentions and have perused the entire record of the appeal memo. we have observed as follows: 9.1 The appellant operates helicopters under a DGCA-issued NonScheduled Operator Permit and provides charter flights for transportation of domestic passengers, where the aircr....
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....ly furnished by the Appellant before the Department? E. Whether the demand is barred by limitation and the invocation of the extended period and imposition of penalties are legally sustainable? 11. ISSUE NO. A: At the outset, we have perused Section 65 (105) (zzzo) of the Finance Act, 1994 (in short the Act‟) which defines the Aircraft Operator Services to mean as follows: "To any passenger, by an aircraft operator, in relation to scheduled or non-scheduled air transport of such passenger embarking in India for domestic journey or international journey;" Supply of tangible goods for use service is defined under Section 65 (105) (zzzzj) of the Act which reads as follows: - "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." 11.1 Further the Department vide D.O.F. No.334/I/2008-TRU dated 29th Feb., 2008, issued a clarification regarding the introduction of the levy of SOTG. The relevant portion of the said clarification is extracted hereunder ....
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....able under the category of "Supply to Tangible Goods Service". The observations of the Tribunal are reproduced below: - "6. We have carefully considered the submissions made 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 ....
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....ing machinery, equipment and appliances for use, without transferring the right of possession and effective control of such machinery, equipment or appliances." There 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." 11.4 This Tribunal in EIH Ltd. vs. Commissioner of Central Excise, Delhi-I -2019(24) GSTL 592 (Tri. Del.) also dealt with this issue and held as follows: "As can be seen, case, the definition specifically provides that the service is in relation to scheduled or unscheduled air transport of the service provided by the appellant cannot be covered by transport of passengers by air service since in that 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 ....
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....under SOTG. The said revenue comprises distinct services as is apparent from the table as provided in the CA Certificate. The table is reproduced in the impugned order in para 43 thereof- Particulars 2008-09 (upto 23rd Feb 2009) 24th Feb 09 to 31st March 2009 2009-10 2010-11 2011-12 Total Service Tax payable Helicopter Hiring 23529875 10083961 63249902 31191536 43071034 171126308 16627173 1684282 Flight Handling 96264 457931 1259236 3799038 3154702 8767171 914435 9433 Tour Operator 19579679 2146665 15488165 17276115 14246032 68736656 2993287 4534151 Renting (Commercial) 269121 - 390225 570341 568046 1797733 190710 . Renting (Residential) 151200 - 167640 185600 204600 709040 - 76145 ....
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.... has been provided by the Appellant in the State of Jammu & Kashmir for Amarnath Yatra. It was argued from the Appellant's side that the services were beyond the scope of Section 64(1) of the Finance Act, 1994, as the embarkation of passengers for these services was made from within J&K and the journey also ended within the State. The reason for confirming the demand of service tax on these services in the impugned order is that the registered office of the service provider and the recipient was in Delhi. The question is whether mere location of the service provider or recipient in Delhi is relevant when the taxable activity itself was carried out in a non-taxable territory. This issue has been clarified by this Tribunal in Cox & Kings India Ltd. v. Commissioner of Service Tax - 2014 (35) STR 817 (Tri. - Del) wherein it was held that service tax is a destinationbased levy, and where the services are actually performed in a nontaxable territory, no service tax can be demanded notwithstanding the location of the contracting parties. In our view since these services were actually rendered in the State of Jammu & Kashmir (Baltal), these are beyond the jurisdiction of Section 64(1) of t....
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....d above) reveals that it was an agreement for dry lease where the aircraft was given on lease by the foreign company to the Appellant for a couple of years. Thereafter, the Appellant got it registered with DGCA in their name for the provision of non-scheduled air transport services. Further, no crew was given along with the Helicopter by the lessor to the lessee, i.e., Appellant, under the agreement. Even the maintenance was also agreed to be at the lessee's/appellant's expense though by Cessna Finance, the Lessor. We do not find merits in the view of the adjudicating authority that the restrictions placed in the lease agreement by the lesser regarding the area of operation of aircraft under the lease or other restrictions on the manner to use will amount to retaining control of aircraft by the Lessor. It is rather observed that the impugned order-in-original has hypothetically vivisected the said Dry Lease agreement into two: one being for Maintenance and Repair, the other being the agreement of Lease. We observe that the Hon'ble Apex Court in the case of Super Poly Fabriks Ltd. vs. Commissioner-2008 (10) S.T.R. 545 (S.C.) laid down the principle of how to read a....
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....parts, in no case forex spent on purchase of spare parts be considered as forex spent on procurement of services. 13.6 A part of demand confirmed for MMR Services (under RCM) also pertains to the repair and maintenance of spare parts outside India. There is no dispute to the fact that the goods were sent outside India for repair and re-imported back herein. To ascertain the taxability of repair services here, Rule 4 of the Place of Provision of Services Rules, 2012 is relevant which reads as: "where the services in question are in respect of goods which are made available by the service recipient to the service provider, the place of provision of such services would be the location where the services are actually performed." 13.7 As the service tax is a destination-based tax, if the place of provision of a service was outside India, it was not taxable in India. In the present matter as the repair took place outside India, the same was not taxable in India.In totality of discussion on this issue, we hold that the appellant did not receive MMR Service from the foreign Company. The agreement of Dry Lease between appellant and foreign lessor (input side) is incorrectly h....
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....r that since the appellant was responsible for the maintenance and repair of the diesel generator sets, the appellant has retained effective control, cannot also be sustained because once the control and possession of the diesel generator sets was transferred to the customers, mere maintenance or repair work will not change the nature of the transaction. This is clear from the decisions of the Gauhati High Court in Dipak Nath and of the Tribunal in Petronet LNG Ltd." This Tribunal in Petronet LNG Ltd. vs Commissioner of Service Tax, New Delhi -2016. (46) S.T.R. 513 (Tri-Del.) observed as under:- "28. Another contention in the written submission by Revenue is that since the Manager, Master, personnel and other crew of the tankers are employees of the owner; are paid overtime, etc., by the owner; under Clause 7 the owner is required to maintain the tanker with regard to wear and tear; under Clause 12 it is obligation of the owner to pay for provisions of the vessel, wages of the personnel and other employees, bear the expenses, stores lubricants, spares, water, etc., and the cost of expenses for survey and overhauling, there is no transfer of the possession and effective ....
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....lled operator by the lessor and maintenance and repairs of the equipment by the lessor. Merely because restrictions are placed on the lessee, it can not be said that there is no right to use by the lessee. Such a view of the revenue does not appear to be tenable when we read carefully the provisions of the agreement. Cl. 13 of the agreement provides for Hirer's Covenants. As per Cl. 13.1, the hirer will use the equipment only for the purpose it is hired and shall not misuse or abuse the equipment. Similarly in Cl. 13.3, it is provided that the hirer will ensure the safe custody of the equipment by providing necessary security, parking bay, etc., and will be responsible for any loss or damage or destruction. Cl. 13.5 provides that the hirer shall be solely responsible and liable to handle any dispute entered with any third party in relation to the use and operation of the equipment. Further Cl. 14 dealing with title and ownership specifically provides that "equipment is offered by GIMMCO Ltd. only on 'rights to use' basis". Cl. 15 relating to damages provides for compensation to be paid by the hirer to the assessee in case of damage to the equipment during the period of use. These r....
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....assessee, Rule 3, CCR, 2004 entitles the assessee to avail the CENVAT credit. We set-aside the confirmation and remand this matter for reconsideration by the adjudicating authority. 15. Issue No. E: 15.1 We note that the tables reveal the extensive communication that took place between the appellant and the Department through Letters/Summons/Audit. As apparent from the additional written submissions of the appellants, the Appellants had provided all documents as and when demanded including their Financial Statements, Annual Reports, invoices, ledgers, major agreements, reconciliations of various types of incomes, forex expenditure details, Bills of Entries, Income Tax Returns, and Service Tax returns etc. in their various replies the appellants have been repeatedly insisting that their turnover for charter hire services was not chargeable to tax under the category of SOTG but for other services under the category of tour operator, renting, pandal or Shamiana, they were duly discharging their service tax liability. Admittedly the appellant was initially paying Service tax under the category of SOTG Service but owing to the ambiguity and prevailing confusion regarding the....