9911796707
TMI Blog2012 (7) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... but used for journey afterwards, under proviso to Section 73 read with Section 66 and Section 68 of the Act. (ii) Demanding Education Cess amount to Rs. 2,45,83,152/- for the period 1.5.06 to 30.9.07 and Rs. 12,33,934/- for tickets sold prior to 1.5.06 but used afterwards under Section 91 read with Section 95 of Finance Act, 1994. (iii) Demanding Higher and Secondary Education Cess amounting to Rs. 45,26,210/- under Section 140 of Finance Act. (iv) Demanding Rs. 1,15,59,580/- collected by them in excess under Section 73A of the Act, 1994. (v) Demanding interest of Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same for embarking at International Airport in India. Initially there was confusion in the industry and various permutations and contributions were required to be considered for discharge of this tax. He emphasized that it was in December 2006 that they received first communication on 7.12.2006 though earlier letters reportedly sent by the department were not received by them. In February 2007 they informed the department about the serious difficulty in computing the tax liability. 4. Regarding Service Tax payable on basic fare, he submitted that appellant started paying service tax from October 2006 from time to time on the basis of information available to them in India. All ticketing 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 Rs. 95,78,63,497/- plus interest of Rs. 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 clarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow this and confirmed this amount against them on the ground of lack of proof in respect of each and every ticket so self adjusted. He submitted that appellant has completed all the details and is in a position to justify its claim. Therefore, the confirmation of demand for Rs. 14,48,81,480/- is purely arbitrary and unsustainable. 9. Learned Counsel submitted that Commissioner has failed to invoke Section 80 with regard to imposition of penalty despite there being a reasonable cause for delay in payment and the default. He contended that the delay in payment of the service tax was due to lack of clarity in the taxability of various components 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice period began after 18.4.2006 and case is governed by Section 73 (1A) of the Act and in absence of payment of penalty to the extent of 25% of the service tax, the concession in that section cannot be ipso facto given to them. Therefore, deposit of Rs. 1,06,98,96,120/- shall not grant them immunity from penalty provisions of Sections 76 and 78 of the Finance Act. 11. Arguing on the dispute of Rs. 5,46,55,403/- learned Counsel for Revenue submitted that on statutory levy the defence claimed by the appellant is of no avail when there was no law permitting such levy to be excluded for determination of the assessable value. Post legislative amendment by enacting Rule 6(v) of Valuation Rules, 2006 does not grant relief retrospectively. 12. On the plea of self adjustment against levy of Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t paying the service tax, the department started the investigation in August 2006 and sought various information/records from them on the basis of which show-cause notice dt. 25.7.2008 was issued to the appellant. According to the appellant, the gross amount charged from the passengers included the following components : (i) Basic Fare (ii) Fuel Surcharge (iii) Insurance charges (iv) Passenger Service Fee (v) Other statutory fees and levies The appellant has deposited the service tax amount of Rs. 106,98,96,120/- with regard to the basic fare and fuel/insurance surcharges and the excess amount demanded under Section 73A of the Finance Act. Appellant also paid an amount of Rs. 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 Rs. 5,46,55,403/- on statutory levies and charges and Rs. 14,48,81,180/- on account of self adjustment of the tax on cancelled tickets. Both sides agreed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of service tax charged is equivalent to the consideration: (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. (2) ........ (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provisions of such service. (4) ................... Explanation - For the purposes of this section.- (a) "consideration" includes any amount that is payable for the taxable services provided or to be provided; The provisions of Rule 5(1) of the Service Tax (Determination of Value) Rules. 2006 are also reproduced below: "5. Inclusion in or exclusion from value of certain expenditure or costs.- (1) 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 perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; does not use such goods or services so procured, and (d) receives only the actual amount incurred to procure such goods or services." On going through these provisions we find that the service tax is chargeable on any taxable service on the gross amount charged by service provider for such service provided or to be provided and the gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after the provisions of service. The appellant also contends that Sub-rule (v) to Rule 6(2) was enacted w.e.f. 27th February 2010 and the taxes levied by any government on any passenger travelling by air if shown separately on the tickets issued to the passenger are to be excluded from the assessable value. We find that this enactment has not been given any retrospective effect. Therefore it will apply only from the date of enactment of the Sub-rule (v) of Rule 6 and appellants cannot claim any benefit on account of this period prior to the amendment. We find that these statutory charges and fees are collected by the appellant from the passengers and form the part of the gross amount of the air t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided. Since all tickets though sold prior to 1.5.2006 journey was undertaken on and after 1.5.2006 and at the time of journey undertaken the levy of service tax on the amount of taxable service was in force and, therefore the appellant is liable to pay the service tax on the air tickets sold by them prior to 1-5-2006 also. In this connection appellant also relied upon the Point of taxation Rules, 2011. We find that the Rules have not been given any retrospective effect and accordingly the appellant is not entitled to avail the benefit of these Rules. We find that Tribunal in the case of CCE v. Krishna Coaching Institute 2009 (14) STR 18 (Tri. - Delhi) has held that since 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 2010 (17) STR 363 (Tri. - Delhi) following the decision of the Krishna Coaching Institute (supra) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he service tax paid by them on account of cancellation of tickets after giving an opportunity of hearing to the appellant. 19. Coming to the issue of imposition of penalty we find that penalties have been imposed on the appellant under Sections 76, 77 & 78 of the Finance Act and appellant has challenged the penalties imposed under Sections 76 and 78 on them in the appeal. We find that penalty under Sections 76 is leviable for failure to pay the amount whereas the penalty under Section 78 provides for penalty for suppressing the taxable value. We find that there had been a failure on the part of the appellant in depositing duty of service tax to the credit of the Government account. This is also a fact that the appellant collected service tax on basic fare from the passengers and did not deposit the said service tax to the department. The period involved in non-payment is also more than 15 months. Hence, there is clearly violation of Section 76 for failure to pay service tax with regard to the service tax available 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges. Tribunal in this case has set aside penalty under Section 78 treating the belief of non-liability of tax on fabricating and dismantling charges as a bona fide belief. This case is also not relevant for the present appeal as the appellant was not even registered under the new service up to 13.12.2007. Appellant also relied the case of M/s First Flight Courier Ltd. (supra) holding that Section 76 may not be justified if penalty had already been imposed under Section 78. 21. In the present case before us, we find that appellant was collecting the service tax on basic fare from the passengers but not depositing the amount with government and then service tax was deposited with government after 15 months attracting the provisions Section 76 of the Finance Act. Similarly taxable value showing the service in tax Returns filed by appellant to the department was also suppressed and in some of the months no value of the taxable service was shown in the Returns. Therefore, there was clearly suppression 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 78 w.e.f. 16.5.2008 operate in two different fields and the penalty was imposable under both sections separately even if offence were committed in course of same transaction. Following this decision we uphold the imposition of penalty under Section 76 of the Finance Act by the Commissioner. 23. However, we find that in case of service tax on fuel/insurance surcharges there was a confusion prevailing about the taxes leviable on these charges and finally Board issued a clarification on 18.9,2007 clarifing that service tax is leviable component also. Thereafter appellants have paid the entire amount along with interest to the department. The service tax on the fuel/insurance surcharges was not being recovered by the appellant from the passengers as in the case of basic fare. Therefore, the delay in payment of service tax on the fuel/insurance surcharges was because of confusion prevailing in industry. As and when the clarification was issued by the Board the appellant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making such payment and the benefit of Section 80 of the Act for not imposition of penalty can be extended to the appellant. 26. In view of the above we hold :- (i) We uphold the confirmation of demand of service tax and cess along with interest on account of statutory levy and charges by the Commissioner; (ii) We uphold the confirmation of demand of service tax and cess along with interest by the Commissioner with regard to air ticket sold prior to 1.5.2006 and journey undertaken on 1.5.2006 or thereafter; (iii) We remand the matter back to the Commissioner on the issue of self adjustment of service tax paid by them on account of cancellation of tickets after giving an opportunity of hearing to the appellant. (iv) An option is given to the appellant to pay penalty equal to 25% of tax amount on basic fare within 30 days of receipt of this order failing which penalty equal to tax amount stands confirmed. (v) Penalty imposed under Section 76 of the Finance Act is upheld. (vi) The penalty with r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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