TaxTMI 
TaxTMI 
2024 (6) TMI 1611
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....of service tax paid on input services, which are not related to output services. Accordingly, Appellant were advised to reverse Cenvat Credit on ineligible services. As directed, the Appellant paid CENVAT Credit amounting to Rs. 55,50,368/- and interest of Rs. 9,05,382/-. Thereafter, a Show Cause Notice was issued on 25.04.2011, inter alia, alleging that; assessee has incurred expenditure in foreign currency under "Lease Rental of Aircraft" and the said service is taxable under "Supply of Tangible Goods" and demanded service tax on import of such services as a recipient under Section 66A of the Finance Act, 1994. Further, it is alleged that the Appellant had provided air transportation on rental basis during the period 2008-09 and 2009-10 to various clients and had not discharged service tax on the rent received for the activity, which falls under the category of "Supply of Tangible Goods" with effect from 15.05.2008 attracting service tax. Further it is alleged that assessee has declared income under the head "Repairs and Maintenance of Aircraft" and not discharged service tax. Hence the Appellant is liable to discharge the service tax on "Repair & Maintenance of Aircraft" carried....
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....ter. The learned counsel for the Appellant also drew our attention to Condition No. 5 of the said permit, wherein it is stated that the permit holder shall be responsible for payment to the concerned authorities applicable charges and taxes pertaining to operation of Air Transport service. Learned Counsel for the Appellant also drew our attention to the findings of the Adjudicating authority, wherein he as referred to the CBEC Circular No. 334/1/2008-TRU dated 29.02.2008 and confirmed the demand of service tax of Rs. 2,73,62,486/- on lease rental of aircraft during 2008-09 & 2009-10 under the classification of "Supply of Tangible goods" as defined in section 65(105)(zzzzj) of the Finance Act, 1994. Learned Counsel drew our attention to the Contract entered by the appellant and submits that Appellant is holding sole right to use Air craft during the period of lease to the exclusion of all including the owner of the Aircraft, it will retain possession and operation control of each of the Aircraft at all times and the Aircraft will not be serviced without the written consent of the lessor. Appellant is in legal possession and control over the Aircraft during the period of lease and Ap....
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....e for engineering, maintenance and repair of the aircraft and to maintain them in airworthy condition including replacement of parts, overhauls, tests, etc., as may be required. 6. The Appellants have registered the aircraft/helicopter taken on Lease in India and the Certificates of Registrations issued by the DGCA showing the details of the aircraft, the Appellant Company being the Aircraft Operator and the Lessor as the owner of the aircraft. 7. The DGCA has issued Non-Scheduled Air Transport Service (Passenger) Permit No 26/2008 dated 7.10.2008 to the Appellant to operate various aircraft including the above mentioned 3 aircraft taken on lease. 8. Perusal of the NSOP No 26/2008 dated 7.10.2008 issued by the DGCA shows that the Appellant being the Aircraft Operator is required to comply with the following conditions amongst others: (i) operate the aircraft in accordance with Aircraft Act, 1934 and Aircraft Rules, 1937 and under the direction, control and permit issued by the DGCA; (ii) no aircraft except with the written permission of the DGCA shall be operated under the authority of this permit, if the crew of the aircraft are not in regular employment....
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.... Rule 3 of the Aircraft Rules. "55. 'Air transport service' has been defined in rule 3 (9) of the Aircraft Rules to mean service for transport by air of persons for any kind of remuneration whatsoever. There is no dispute that the appellants have used the aircraft for the transport of persons for remuneration. There is no stipulation or restriction or a condition in the said definition that a tariff should be published or that such service should be rendered only on per-seat basis and not by chartering or about the category or class of persons to be transported. Thus, the contention of the department that the appellants have rendered 'air transport service' to their group companies by carrying personnel of their group companies is not of any relevance as there is no prohibition in the said definition against any kind of persons to be transported. 56. Rule 3 (49) of the Aircraft Rules defines 'scheduled air transport service' to mean an 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 recognizably systematic seri....
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....rvice. Thus, it is clear that M/s Deccan Aviation Limited (later KFAL) had provided "Maintenance & Repairs Service" of aircraft for the period up to October 2008, was the "service provider", paid the service tax as applicable and filed ST-3 Returns. As per the Composite Scheme of Arrangement as approved by the Hon'ble High Court, M/s Deccan Charters Ltd., came in to existence from 01.01.2008 and became effective from 01.11.2008 after issue of NSOP No 26/2008 dated 07.10.2008. The value of service in the Books from 01.01.2008 was to give effect to the Composite Scheme of Arrangement as approved. Therefore, mere accounting entry in the Books of the Appellant as per the Scheme of Arrangement cannot lead to the demand of service tax without establishing provision of taxable service and the person liable to pay service tax during the relevant period. M/s Deccan Aviation Limited had actually provided the service, paid service tax and submitted ST-3 Returns for the period from 01.01.2008 onwards. The demand as confirmed in the impugned order amounts to double taxation of the service, which is impermissible. There is also no allegation and/or finding that M/s Deccan Aviation Limited had no....
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....No 198/8/2016-ST dated 17.08.2016. 13) M/s Great Eastern Shipping Company Ltd Vs State of Karnataka 2020 (32) GSTL 3 (SC) 14) M/s GS Lamba & Sons Vs State of Andhra Pradesh 2015 (324) ELT 316 (AP) 15) M/s Aggarwal Brothers Vs State of Haryana and another AIR 1999 (SC) 2868 16) M/s MSPL Ltd Vs CCE, Belgaum Final Order No A/20045-20050/2022 dated 18.2.2022 by the Hon CESTAT, Bangalore Approved by the Hon'ble Supreme Court vide Order dated 20.1.2023 dismissing Civil Appeals No 427-432/2023 filed by the Department, 17) M/s Kinetic Communications Ltd Vs CCE, Pune 2017 (3) GSTL 319 (T-Mum) 18) CCE & ST Vs Brindavan Bottlers Ltd 2019 (27) GSTL 354 (T-All) 19) M/s GIMMCO Ltd Vs CCE & ST, Nagpur 2017 (48) STR 476 (Tri-Mum) 20) M/s Satish Crane Services Vs CCE, CC & ST, Mysore 2019 (25) GSTL 115 (Tri-Bang) 21) M/s Indian National Ship Owner's Association Vs UOI - 2009 (14) STR 289 (Bom) 22) UOI Vs Indian National Ship Owner's Association - 2011 (21) STR 3 (SC). 23) M/s Civil Aviation Requirement dated 17th May 2000 24) M/s VRL Logistics Ltd Vs CC, Ahmedabad 2022-TIOL-717-CESTAT....
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....nd proviso to Section 73 (1) of the Finance Act, 1994. Section 65(105) (zzzzj) of the Finance Act, 1994 defines the taxable service under the classification of "Supply of Tangible Goods" as under:- "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 machinery, equipment and appliances for use, without transferring the right of possession and effective control of such machinery, equipment and appliances.' 19. Further as per the Circular No. 198/8/2016 dated 17.08.2016, specific guidelines are issued by Board to ascertain whether the service failing under the category of transfer of the right to use. We have considered the agreement entered by Appellant with overseas agencies. As per the terms of the agreement, it will retain possession and operation control of each of the Aircraft at all times and the Aircraft will not be serviced without the written consent of the lessor. As per the certificate of Registration issued for Bell Helicopter (VT-DAI) by Directorate of Air Worthiness on 01.10.2008, the Aircraft has been duly entered into Register of India with effect from 31.08.200....
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.... international journey. Section 65 (3a) - "Aircraft" has the meaning assigned to it in Clause (I) of Section 2 of the Aircraft Act, 1934. 21. Further Rule 3 (9) of the Aircraft Rules, 1937 defines "Air Transport Service" as under: "(9) Air Transport Service" means 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". 22. Rule 3 (49) of the Aircraft Rules, 1937 defines the "Scheduled Air Transport Service" as under: "(49) Scheduled air transport service" means an 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". 23. The CAR (Civil Aviation Requirements), 2000 define the expression "Non-Scheduled Air Transport Services (Passenger)" as under: "Non-Scheduled Air Transport Services (Passenger)" means air transport services other than scheduled air transport services as defined....