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National Aviation Co. of India Ltd. Versus Commissioner of Service Tax, Mumbai

Services of transportation of passengers - Advance receive for journey before levy of service tax i.e. 1/5/2006 - Suppression of facts - Bonafide belief - Bar of limitation - Assessee contends that that they were under the bonafide impression that the service tax liability may not arise on an amount received as advance for the journeys to be conducted after 01/05/2006 - Held that:- It can be noticed from the letter received by the appellant from the office of the Assistant Commissioner, service .....

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rect details from the appellants, which they did not do so. Further, we find that the post communication dated 06/08/2006, which is referred by the adjudicating authority, it was also in the knowledge of the department that a clarification has been issued, despite such clarification, there seems to be no follow up by the department like seeking for the details or demand of tax from the appellants, in the absence of any positive action of in suppressing the details from the department, we find th .....

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iyush Chhajed, CA For the Respondent : Shri K S Mishra, Addl. Comm. (AR) ORDER Per: M V Ravindran: 1. This appeal is directed against Order-in-Original No. 13/STC-I/BR/10-11 dated 17/06/2010 passed by Commissioner of Service Tax-I, Mumbai. 2. The relevant facts that arise for consideration are that the appellant herein are providing services of transportation of passengers embarking in India for international journey by air services (here in after referred to as services). The service tax liabil .....

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mitation, it was the submission that they were under the bonafide impression that the service tax liability may not arise on an amount received as advance for the journeys to be conducted after 01/05/2006. The adjudicating authority did not agree with the contentions raised and confirmed the demands along with interest and also imposed penalties. 3. The learned Chartered Accountant would draw our attention to the facts of the case as also to the show-cause notice and the order-in-original. On me .....

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by the Board consequent to such issuance of notification and submits that from 01/07/2010, the service tax liability on the air travel by economy class came under service tax net and the board in the said circular issued, exempted any amount received as advance for the flights to be taken after 01/10/2010. He would submit that this circular should be applied for the case in hand also. He also relies upon the judgement of the apex Court in the case of Suchitra Components Ltd.,Vs. CCE, Guntur repo .....

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s aware of the entire issue on 10/11/2006 and hence the show-cause notice issued on 10/03/2010 is hit by limitation. It is also his submission that findings recorded by the adjudicating authority that the appellant's issue clarified from the Board as to the taxability of the amount received as early as in 06/08/2009, they should have started discharging the service tax on the amounts so received in advance by their own, is an incorrect proposition as the appellant were in doubt and hence, su .....

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e date the services were taxed i.e., 01/05/2006. He would submit that there is no dispute that the said amounts, for which services were undertaken by the passengers after 01/05/2006 are liable to be taxed. He would submit that the appellant being in the organised sector, was aware of the taxability of the services rendered by them and should have discharged their service tax liability on his own. As regards the limitation, it is his submission that the appellant did not inform the department ab .....

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ervice is of are the amounts, which were received in advance by the appellant from the passengers, who took the services either entirely or partially after 01/05/2006. 5.2 We would like to record that the reliance placed by the learned Chartered Accountant on the Board's Circular No. 334/3/2010-TRU dated 01/07/2010 will not carry the appellant's case any further, as the circular is not for the relevant period in hand; as also we see from the Circular that the said circular was issued spe .....

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llected prior to 01/05/2006. We find that a letter dated 10/11/2010 from the department was addressed to the appellant, which reads as under: OFFICE OF THE ASSISTANT COMMISSIONER OF SERVICE TAX, ROOM NO. 35, 2 ND FLOOR, MADHU INDUSTRIAL ESTATE, P.B. MARG, WORLI, MUMBAI - 400 013 F.No. ST/MUM/DIV-III/GR-I/ATS/7913 Mumbai, the 10/11/2006 To: M/s Air India Ltd., Finance Building Old Airport, Kalina Santacruz (E) Mumbai - 400 029 Sub: Levy of Service Tax on International Journey by Aircraft.. reg Ge .....

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istry of Finance) vide Circular No. 85/3/2006-ST dated 17/10/2006 has interalia clarified that service tax is leviable on the total value of the ticket. The copy of said Circular is available on Website : www.servicetax.gov.in In view of the above you are requested to submit the following information so that early action can be taken. Further you are also requested to inform the amount of service tax paid during September 06, by return of tax, if any. Month wise (May 06 to Sept 06) Value of Tick .....

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ispute. It can be noticed from the letter received by the appellant from the office of the Assistant Commissioner, service tax specific details were called for and such details were given. In our view the appellant had volunteered the information as soon it was sought by the departmental authorities. In our view the details which were not sought could not have been supplied by the appellant as against this, on limitation, the findings of the adjudicating authority are as follows: "4.3. On g .....

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rvice rendered by them from 01.05.2006. Thus NACL intentionally evaded the payment of Service Tax. They chose not to comply with the provisions of the Act and the Rules made there under to avoid payment of service tax. The service tax liability of the noticee for the services rendered from 01.05.2006 is clearly established. Receipt of payment prior to that date will not obviate the tax liability. Regarding the variation in the demand amount, I find that since they have collected such amount much .....

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laws relied on by the noticee is different on material facts mainly dealing with Central Excise issues under different circumstances. As such their plea against demand for extended period and for non-imposition of penalty for non-payment of service tax in time is not legally tenable. As per Section 75 of the Act, interest on delayed payment is automatic and mandatory. Considering all the above facts and evidences, I pass the following order: 5.5 We do not understand the reasoning given by the a .....

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rom the appellants, which they did not do so. Further, we find that the post communication dated 06/08/2006, which is referred by the adjudicating authority, it was also in the knowledge of the department that a clarification has been issued, despite such clarification, there seems to be no follow up by the department like seeking for the details or demand of tax from the appellants, in the absence of any positive action of in suppressing the details from the department, we find that tax liabili .....

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t and hence, requires looking into the mind of the appellant by gauging its actions, which is an indication of one's state of mind. Black's Law Dictionary, Sixth Edition (pp 1599) defines "willful" in the following manner: - "Willful. Proceeding from a conscious motion of the will; voluntary; knowingly; deliberate. Intending the result which actually comes to pass… An act or omission is "willfully" done, if done voluntarily and intentionally and with the s .....

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ivities to assessment. The Development Commissioner answered in favour of the appellant and in its reply, even quoted a letter by the Ministry of Commerce in favour of an exemption the appellant was seeking, which anybody would have found satisfactory. Only on receiving this satisfactory reply did the appellant decide to claim exemption. Even if one were to accept the argument that the Development Commissioner was perhaps not the most suitable repository of the answers to the queries that the ap .....

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a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. This Court observed in Union of India Vs. Ashok Kumar & Ors.((2005) 8 SCC 760) that "it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility." 25. Moreov .....

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in Collector of Central Excise v. H.M.M. Ltd. (supra) has observed that in order to attract the proviso to Section 11-A(1) it must be shown that the excise duty escaped by reason of fraud, collusion or willful misstatement of suppression of fact with intent to evade the payment of duty. It has been observed: '...Therefore, in order to attract the proviso to Section 11- A(1) it must be alleged in the show-cause notice that the duty of excise had not been levied or paid by reason of fraud, col .....

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