TMI Blog2012 (7) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax liability on commercial training and coaching institutes arising from 1.7.2003, tax on advance received prior to such date for service provided after said date is leviable, Tribunal in the case of CCE v. Ashok Singh Academy (2009 (8) TMI 288 - CESTAT, NEW DELHI) following the decision of the Krishna Coaching Institute (2008 (10) TMI 34 - CESTAT NEW DELHI) upheld the demand on advances received prior to 1.7.2003 holding that taxable event in service tax is providing of the service. Following these decisions accordingly, we uphold the confirmation of demand of service tax and cess by the Commissioner with regard to the air ticket sold prior to 1.5.2006 and journey undertaken on 1.5.2006 or thereafter. - Decided against the assessee. Self adjustment of excess service tax paid by the appellant on account of cancellation of tickets - held that:- Since the appellant is ready to produce all the details, this finding of the Commissioner on denial of the self adjustment is set aside and the matter is remanded back to the Commissioner on the issue of self adjustment of the service tax paid by them on account of cancellation of tickets after giving an opportunity of hearing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under Section 73A of the Act, 1994. ( v ) Demanding interest of ₹ 10,23,08,903/- on delayed payment under Section 75 of the Finance Act, 1994. It was also proposed in the show cause notice to impose penalty under Sections 76, 77 78 of the Act, on the appellant and to appropriate the amount of Service Tax and interest already deposited by them. Show cause notice was adjudicated by the Commissioner vide the impugned order who confirmed the amounts stated in the show cause notice with minor variation in Service Tax, Cess and Interest. 2. Brief facts of the case are that appellant is engaged in the business of providing services of Transport of passengers embarking in India for International journey by Air Service along with other services to its clients. This service became taxable w.e.f. 1.5.2006. Intelligence was gathered by officers of Commissionerate of Service tax that appellant was not paying Service Tax on gross value of the services provided under the category of service 'Transport of passengers embarking in India for international journey by air service' as per provisions of Section 67 of Finance Act, 1994 read with Service Tax (Determinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information is sent by computer of various outside agencies to their London Head Office. Considering that thousands of tickets were sold world wide, this was a massive task which took time for computation of tax liability Accordingly on the receipt of information appellant paid ₹ 95,78,63,497/- plus interest of ₹ 10,19,30,747/- towards basic fare component. 5. On the issue of service tax on Fuel/Insurance Surcharge, all airlines protested about this levy and CBEC in September 2007 clarified that tax is leviable on this component also. The appellant paid this tax amounting to ₹ 7,15,49,076/- plus interest ₹ 1,12,76,408/-though this tax was not recovered from the passengers prior to September 2007. 6. Learned Counsel further stated that it was their consistent stand that service tax is not leviable on the component on statutory levies and charges. He submitted that Passenger Service Fee (PSF) is levied under Rule 88 of the Indian Aircraft Rules, 1937. Section 22 of the Airports Authority of India Act, empowers it to collect fees for amenities given to passenger at airport. Similarly DF is levied under Section 22A of Airport Authority of India Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the fare like statutory fees and charges fuel and insurance charges and whether the tax is attracted on overseas booking and there was need to amend the worldwide ticketing system to comply such law. Therefore, these were reasonable causes in delay of payment and there was enough justification of invoking Section 80 in this case. Referring to para 27.5 of the order, he further stated that there is no mens rea on the part of the appellant, therefore there was no case for imposition of penalty. So called suppression mentioned in the show-cause notice is in respect of non-inclusion of certain elements in the value of the service. On inclusion of these elements airlines approached Central Board of Excise and Customs which issued clarification in October 2006 and September 2007. Therefore there is no any suppression on the part of the appellant. Moreover, appellant has paid the service tax amounting to ₹ 1,06,98,96,122/- voluntarily. Section 73(3) specifically prohibits the issue of show-cause notice when the tax is paid prior to issue of show cause notice. He further submitted that penalties cannot be imposed under Sections 76 and 78 of the Act, as penalties under these se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by enacting Rule 6(v) of Valuation Rules, 2006 does not grant relief retrospectively. 12. On the plea of self adjustment against levy of ₹ 14,48,81,190/-learned Counsel for the Revenue submitted that when return did not disclose how the adjustment is claimed by the appellant, such claim is not permissible Appellant has no choice of setting off the liability against refund unless that meets the scrutiny of law. Appellant has its own system of computerization and should have furnished the proper facts and figures to claim adjustment. 13. On dispute of service tax levy on tickets sold prior to 1.5.2006 amounting to ₹ 6,29,30,656/- learned Counsel submitted that since the service was provided after the levy was introduced, service tax is liable to be paid on ticket sold prior to 1.5.2006 and journey undertaken own and after 1 5.2006. He relied on the following case laws: ( i ) CCE C v. Wipro Ltd. 2011 (269) ELT 490 ( ii ) Commissioner v. Krishna Coaching Institute 2009 (14) STR 18 (Tribunal) ( iii ) CCE v. Ashok Singh Academy 2010 (17) STR (Tri. - Delhi). 14. In reply to the Revenue's contentions, the learned Advoca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Finance Act. Appellant also paid an amount of ₹ 6,01,29,752/- under protest only on the basic fare and fuel/insurance surcharges in respect of the tickets booked before 1.5.2006 for travel after 1.5.2006. Appellant has not paid the amount of ₹ 5,46,55,403/- on statutory levies and charges and ₹ 14,48,81,180/- on account of self adjustment of the tax on cancelled tickets. Both sides agreed that there is no dispute with regard to the payment of the service tax on basic fare and fuel/insurance surcharges in the appeal. On these charges the only dispute is regarding the imposition of penalty. The appellant is disputing the payment of service tax on the three components namely the levy of service tax on amount realized by the appellant on account of statutory levies and charges imposed on the passenger tickets and the amount of self adjustment by the appellant on the account of cancellation of ticket. The appellant is also disputing the levy of service tax on tickets sold prior to 1.5.2006 but journey undertaken after 1.5.2006. Appellant has paid the service tax amount on the basic fare and fuel/insurance surcharges components in this category also. Appellant is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where any expenditure or costs are incurred by the service provider in the course of providing taxable service all such expenditure or costs shall be treated as consideration for the taxable service provided or to be provided and shall be included in the value for the purpose of charging service tax on the said service . Exclusions are permissible to the extent they are permitted by law, Exclusions have been provided in Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006, which reads as follows:- 5(2) Inclusion in or exclusion from value of certain expenditure or costs.- (1) .......... (2) Subject to the provisions of sub-rule (1), the expenditure or costs incurred by the service provider as a pure agent of the recipient of service, shall be excluded from the value of the taxable service if all the following conditions are satisfied, namely:- ( i ) the service provider acts as a pure agent of the recipient of service when he makes payment to third party for the goods or services procured; ( ii ) the recipient of service receives and uses the goods or services so procured by the service provider in his capacity as pure agent of the recip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these statutory charges and fees are collected by the appellant from the passengers and form the part of the gross amount of the air ticket under Section 67 of the Finance Act. There is no provision to exclude any of these charges from the taxable value. We also find inclusion and exclusion from the value of certain expenses and costs are given in the Rule 5 of the Service Tax Rules and Rule 5(1) clearly states that any expenditure or cost incurred by the service provider in the course of taxable service of such expenditure or costs shall be treated as for consideration for the taxable service. Therefore, all the expenditure incurred by the appellant on account of the statutory levies and charges in providing the taxable service shall be treated as a consideration for the taxable service and shall be included in the value for the purpose of charging service tax. There are exclusions of certain expenditures and costs as provided under Rule 5(2) of the Service Tax Rules, 2006 and those exclusions are mentioned at Serial Nos. (i) to (viii) of the Rule 5(2) and for exclusion all conditions are to be fulfilled by the service provider. In the present case appellant has not come forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received prior to 1.7.2003 holding that taxable event in service tax is providing of the service. Following these decisions accordingly, we uphold the confirmation of demand of service tax and cess by the Commissioner with regard to the air ticket sold prior to 1.5.2006 and journey undertaken on 1.5.2006 or thereafter. 18. The third dispute is with respect to denial of self adjustment of excess service tax paid by the appellant on account of cancellation of tickets. The appellant claimed that it had refunded the service tax amounting to ₹ 14,48,81,180/- to the passengers on account of the cancellation of tickets but demand on this account is also confirmed against them by the Commissioner. Appellant contended that under Rule 6(3) of the Service Tax Rules appellant is entitled for self adjustment of excess service tax paid against the service tax liability for the subsequent period For the sake of brevity the Rule 6(3) of the Rules is reproduced below:- 6. Payment of service tax - (3) Where an assessee has paid to the credit of Central Government service tax in respect of taxable service, which is not so provided by him either wholly or partially for any reason, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on basic fare. Coming to the penalty under Section 78 the penalty is imposable when there is a suppression of taxable value by the assessee. It is the contention of the Revenue that in the service tax Returns filed by the appellant during April 2006 to September 2006 no disclosure of any amount of receipt towards international air travel service was provided in the Return. Similarly, the Returns of the period October 2006 to March 2007 show the extremely low amount of receipts and the real value of the taxable service was thus suppressed by the appellants. Therefore, there is the case of imposition of penalty under Section 78 of the Act. On the other hand, the appellant submitted that there was no wilful breach of law by the appellant to file the Returns and nor there was any mala fide for gross tax evasion and the appellant relied on para 27.5 of the adjudication order where the Commissioner has held that party has not indulged in fraud, collusion or wilful mis-statement and party has not contravened the provisions with intent to evade payment of service tax We find that Commissioner has held that party had failed to comply with the obligation cast upon it by the legislature and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession of the taxable value attracting provisions of Section 78 of the Finance Act. 22. From the above, we find that penalties imposable in respect of the component of basic fare was paid by the appellant before the issuance of the show cause notice along with the interest. It is the contention of the appellant that under Section 73(3) when the tax amount and interest is paid there is no need to issue even the show cause notice. On the other hand, the revenue contends that since the 25% of the tax amount payable as penalty was not paid by the appellant within 30 days appellant is not entitled for any reduction in the penalty. We find that Section 73(3) covers those cases where there is no suppression of fact and in case of suppression despite such payment of notice can be issued. We also find that under Section 73(1A), the reduction in penalty equal to 25% of the service tax amount is available to the assessee if the penalty is also paid along with interest and tax amount to the department within 30 days. We note that the Commissioner in the adjudication order has not given any option to the appellant that if the service tax along with interest and 25% of penalty is paid withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant paid the entire amount with interest. Therefore, there is a reasonable cause in delay of payment of the service tax and therefore under Section 80 of the Act, no penalty is imposable with regard to the service tax on this component of the fuel/insurance surcharges. 24. Regarding the service tax on tickets issued prior to 1.5.2006 we find that it is the contention of the assessee that the meeting was called by the Commissioner of Service tax in September 2007 and he suggested to all air lines to make representation to the CBEC under Section 11C of the Central Excise Act and to state that no service tax is liable on such tickets. Appellant also made representation to Board on 28.1.2008. This representation was rejected by the Board on 3rd November 2008. Then appellant had paid the service tax and cess amount on the basic fare, fuel/insurance surcharges component in respect of these tickets sold prior to 1.5.2006. We note that when tickets were sold, there was no levy. We find that there is enough justification for invoking the Section 80 of the Finance Act for not imposing the penalty on them. The matter has gone up to the Board level on the advice of the Commissioner of S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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