TMI Blog2015 (11) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... is one of interpretation of the taxing statute and as such being debatable, there is no element of any fraud or suppression. Accordingly, the extended period of limitation is held not invocable. - there being no deliberate defiance of the provisions of law or non-compliance with the provisions of Service Tax, none of the penalties are held to be attracted. Accordingly, I agree with the learned Member (Judicial) on this point. Thus, the penalties are fit to be set aside. - Decided in favour of assessee. - Appeal Nos. ST/865/12, 866/12 & ST/86081/14 and ST/86819/14 - Final Order Nos. A/3405-3408/2015-WZB/STB and Misc. Order Nos. M/4762-4765/2015-WZB/STB - Dated:- 15-10-2015 - Ashok Jindal, Member (J), P S Pruthi, Member (T) And Third Member on Reference: Anil Choudhary, Member (J) For the Appellant : Mr. Sunil Agarwal, Adv. Mr Badrinarayanan, Adv For the Respondent : Dr B S Meena, Additional Commissioner (AR) ORDER Per Ashok Jindal 1. The appellants are in appeal against impugned orders wherein service tax is demanded from them under the category of transportation of goods by air alongwith interest and various penalties have also been imposed. 2. As issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply is an issue faced by all the tax authorities and judiciary worldwide and the principal emerged from those decisions will equally apply in determination of the principal supply in the present case. To support this contention, the decision of The European Court of Justice in the case of Card Protection Plan vs CCE in Case C-349/96 was relied upon and it is also relied upon the case of Commissioner Customs Excise vs British Telecommunication Plc 1999 UKHL 3. It is argued that internationally excess baggage charges are treated as incidental and part and parcel of transport of passengers by air service only. It is further submitted that merely because charges for excess baggage were collected separately from the passengers, it cannot be held that a separate service has been provided by the appellants to the passengers. In fact, there are two part tariff, one charges at the time of issuance of ticket and another at the time of carrying excess baggage. It is further submitted that the activity undertaken by the appellant is not transport of goods by air service. To support this contention, reliance was placed in the decision of the Tribunal in Gujarat State Fertilizer Chemicals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges are the integral part of the service of transportation of passenger by air. 12. Section 65A of the Finance Act,1994 also deals with the situation which is reproduced hereunder: 65A. Classification of taxable services (1) For the purposes of this Chapter, classification of taxable services shall be determined according to the terms of the sub-clauses (105) of section 65; (2) When for any reason, a taxable service is prima facie, classifiable under two or more sub-clauses of clause (105) of section 65, classification shall be effected as follows :- (a) the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description; (b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which gives them their essential character, in so far as this criterion is applicable; 13. From the above provisions, it is clear that when taxable service comprises of more than one services then such services shall be classifiable under the taxable head which gives its essentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are paid by passengers separately, they are being provided a service of transportation of goods by Air. This is what the statute clearly and unambiguously provides. This activity of carriage of excess baggage is distinct and separately identifiable and therefore no occasion arises for clubbing this service with the service of transportation of passengers. It is only the free baggage allowed with the passenger ticket that can be called as incidental to the transportation of passengers because no separate charges are levied for free baggage. It is incidental because the free baggage is apparently included in the cost of the ticket. But when the transportation of excess baggage is being charged separately and is being paid for distinctly and separately and is also specified as a service, the question of calling this activity as incidental does not arise. Merely because two services are being provided simultaneously but distinctly, it cannot lead to an over-simplistic conclusion that a single service is being provided. There are instances when unaccompanied baggage is transported ina passenger Aircraft. Will Service Tax not be leviable. There are many instances when the passengers b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo essentially different transactions, one for passenger and the other for excess baggage. The reliance on the CBEC DOF No. 334/1/2008-TRU dated 29.02.2008 appears to be selective. The Board Circular says that There is a need to determine whether a given transaction is the one containing major and ancillary elements or the one containing multiple and separate major elements. In the case of a transaction containing a major and ancillary element, classification is to be determined based on the essential features or the dominant element of the transaction. A supply which comprises a single supply from an economic point of view should not be artificially split . The reliance on this Circular is misplaced because here we are dealing with distinctly separate elements. And this is not a case where supply of services is being artificially split from an economic point of view. In fact the separate transaction and separate invoicing for passenger and baggage does not suggest a single supply of service. 19.2 The reliance of the cases of Hira Industries (supra) and Ramakrishna Reddy (supra) is not appropriate as they do not bear the same facts. In the first case, it was held that loading a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above definition to say that the excess baggage is not meant for sale and therefore cannot be treated as goods. A plain reading of the above definition shows that the first para of the definition reads a, goods means every kind of movable property other than actionable claims and money. This part obviously indicates that baggage gets covered under the terms goods . The learned Counsel has also referred to the VAT Laws of other countries. Here we are dealing with a situation for a period prior to the introduction of the Negative List concept which was introduced in 2012. The conclusions arrived at by me are totally based on the Indian Service Tax statute and it would not be appropriate to take shelter of laws of other countries. 20. Being well aware of the requirement of law, the appellants collected excess baggage charges over a long period of time without declaring the same to the department. This shows suppression of facts and intention of the appellant to evade duty. Hence, the extended period under Section 73(1) of the Finance Act has been rightly invoked. Reliance is placed on Bharat Roll Industry (Pvt.) Ltd. vs. CCE, Haldia 2008 (229) ELT 0107 (Tri-Cal). The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Kerala High Court. In view of the contrary judgements and the matter being debatable, I refrain from imposing penalty under Section 76 of the Finance Act, 1994. 22. Accordingly, the impugned orders are upheld except for penalty under Section 76 which is set aside. Difference of Opinion As there is a difference of opinion between the Members, therefore, following points placed before the Hon'ble President for reference to the Third Member: 1. Whether Member (Judicial) is correct in holding that the excess baggage charges collected by the appellant is an integral part of the main service namely transportation of passenger by air therefore, the demand is to be set aside. OR Whether Member (Technical) is correct in holding that the excess baggage charges are required to be taxable under the category of transportation of goods by air craft. 2. Whether in the facts and circumstances of the case the Member (Judicial) is correct in holding that extended period of limitation is not invokable therefore the demand for the extended period of limitation is to be set aside. OR Whether Member (Technical) is correct in holding that in the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classifiable under Section 65(105)(zzn). There is no separate contract in the facts of the case for transport of goods (excess baggage). More particularly, in the case of agreement of transport of passengers by Air, there is no element of transport of unaccompanied goods. Thus, agreeing with the learned Member (Judicial), I hold that the excess baggage charges collected by the appellant Airlines is integral part of the service provided for transport of passengers by Air'. 3.1 So far the question of invocation of extended period is concerned, I find that there is no case of any suppression on the part of the appellant Airlines. The appellant Airlines have duly disclosed the receipts from passengers towards excess baggage in their Books of Account, maintained in the ordinary course of business. I find that the issue is one of interpretation of the taxing statute and as such being debatable, there is no element of any fraud or suppression. Accordingly, the extended period of limitation is held not invocable. 3.2 So far the imposition of penalties are concerned, in the facts and circumstances, there being no deliberate defiance of the provisions of law or non-compliance wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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