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M/s. American Airlines Versus C.S.T., Delhi

Valuation - transportation of passengers by air service - inclusion of fuel and insurance surcharge as well as on passenger service fee and airport tax - suppression of facts - extended period of limitation - Held that:- it is clear that the airlines association has taken up the issue of fuel and insurance surcharge with the CBEC which issued the clarification. In the circumstances, it is totally untenable to even allege suppression/ wilful mis-statement with regard to service tax demand pertain .....

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tely bring out as to how it was a wilful act to evade service tax and the airline was aware that the same were includible in the assessable value. - Mere omission to give correct information is not suppression of facts unless it was deliberate and that an incorrect statement cannot always be equated with wilful mis-statement. Thus, the ingredients required for imposing penalty under Section 78 ibid are conspicuously absent in this case. - Demand pertaining to passenger service fee and a .....

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enalties) was confirmed on the ground that the appellant provided transportation of passengers by air service but did not pay service tax on the full value thereof in-as-much-as no service tax was paid on the amount of fuel and insurance surcharge as well as on passenger service fee and airport tax. 2. Ld. advocate for the appellant contended that the appellant has not contested the demand pertaining to the service tax on fuel surcharge. (Fuel and insurance surcharges commonly known as YQ & .....

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[2015-TIOL-1481-CESTAT-DEL]. He also submits that there was no wilful mis-statement or suppression of facts as the airline had taken up the issue through airlines association and it was only on 18.09.2012 that the issue of fuel and insurance surcharge was clarified by CBEC and thereafter the service tax relating to thereto was remitted by it. 3. Ld. Departmental Representative on the other hand argued that to the extent that the above charges constitute part of assessable value and therefore se .....

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Airlines Vs. CST, New Delhi (supra) and Continental Airlines Inc. Vs. CST, Delhi (supra) wherein it has been held that no service tax is payable on these charges because these charges are not includible in the assessable value. Indeed CESTAT judgement in the case of British Airways PLC Vs. CST, New Delhi (supra) cited by Revenue was taken note of and distinguished by CESTAT judgement in the case of Lufthansa German Airlines Vs. CST, New Delhi (supra) by observing inter alia that the judgement i .....

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ia stated as under:- To Shri P.K. Gupta Chairman, Board of Airline Representatives in India C/o AirIndia, Air India Building 13th Floor, Nariman Point Mumbai-400 021 Subject:- Service tax on transport of passengers embarking in India for international journey by air service - Regarding. Please refer to your letter dated September 04, 2007, regarding inclusion of YQ and YR component in taxable value of service provided by aircraft operator to passenger embarking India for international journey [s .....

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nd YR charges are integral part of the consideration received for the services provided. Method of vivisecting may not be of any relevance as long as the amount is in the nature of the consideration paid for the service provided. The legal status has been explained in person during the meeting with the representatives of Board of Airline Representatives in India. 3. In view of into above, you are advised to take immediate necessary action to pay the appropriate service tax on above mentioned ser .....

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ing to fuel surcharge. We have perused the Show Cause Notice also and find that the allegation of wilful suppression of taxable value has been made essentially on the ground that the appellant did not include the fuel surcharge, PSF and airport taxes in the assessable value and failed to file correct ST-3 returns (meaning that the assessable value shown in the ST-3 returns did not include the PSF and airport taxes and fuel and insurance surcharge). The Show Cause Notice does not even remotely br .....

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