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2017 (3) TMI 1024 - AT - Service TaxBusiness Auxiliary services - activities namely Ground Traffic, other support service and Handling agreement performed by AIL (Air India Limited) - Held that: - In terms of this agreement, AASL was required to pay AIL certain consideration amounting to approx. 4%. In terms of this agreement AIL was to execute the entire function of running operations on behalf of AASL. The activities included ticketing, IT Support, Billing and Accounting, Administration of Foreign Exchange Transactions, Revenue collection, Reservation support etc. In return, AASL was to pay AIL equivalent to 4% of the revenue generated by AASL. Even though AIL has been raising bills against the services provided by them to AASL, they were also providing financial help to AASL by way of bearing its loss and further providing financial aid to keep AASL afloat. AIL’s ground for non-payment of service tax is that they have not received this consideration in terms of 4% of the revenue earned. This factum can be settled through a certificate from an independent Chartered Accountant, who may be asked to look into the books of AASL and AIL for the relevant period and may be asked to certify whether such consideration has been received AIL by book transfer or otherwise, as per the terms of the agreement entered into between two companies. If the consideration has been received by AIL, then we are of the view that service tax is liable to be paid by AIL on such receipts - matter remanded for this purpose. Time limitation - Held that: - the argument taken by appellants that service tax was not paid on the basis of bonafide belief that service tax was not payable, is not convincing - Consequently, Revenue is entitled to invoke the extended period of limitation in this case. Aircraft lease charges - demand - Held that: - These clauses clearly show that lease charges were to include maintenance charges and AIL was under obligation to maintain and repair the aircrafts as part of the lease agreement. Thus this maintenance agreement cannot be considered as an independent and separate agreement. Accordingly, in the impugned order, it has been rightly concluded that the aircraft lease service cannot be subjected to service tax under the category of Management, Maintenance and Repair. Appeal allowed by way of remand.
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