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Japan Airlines International Co. Ltd. Versus C.S.T. New Delhi

2016 (7) TMI 1077 - CESTAT NEW DELHI

Valuation - transport of passengers embarking in India for international journey by air service - service tax was paid only on the basic air fare and without including various charges - Extended period of limitation - Validity of show cause notice - Rule 5(1) of Service Tax (Determination of Value) Rules, 2006, was declared ultra vires by Delhi High Court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. vs. Union of India [2012 (12) TMI 150 - DELHI HIGH COURT]. - Held that .....

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ese charges clearly constitute part of the gross receipt for rendition of services. - Decided against the assessee. - Extended period of limitation - Held that:- , it is evident that appellant deliberately dilly dallied in providing the required information in spite of being asked repeatedly as a consequence of which the Revenue could eventually issue the show cause notice based upon whatever information was belatedly provided by the appellant although it did not provide the entire informati .....

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the Income Tax Act. - Held that:- the purpose of show cause notice (resulting in impugned order) has been fully and eminently served in this case and the impugned order has been issued in full and complete compliance of the principles of natural justice. In these circumstances, this contention is too flimsy to be of any consequence whatsoever. - Decided against the assessee. - Decided partly in favor of assessee. - Service Tax Appeal No. 02 of 2010 - Final Order No. 52422/2016 - Dated:- 8-7- .....

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service' only on the basic air fare and did not include the charges mentioned at Sl.No.(ii) to (xx) below: i. Total Basic Fare ii. Fuel Surcharge (YQ) iii. Insurance Surcharge (YQ) iv. Insurance & Fuel Surcharge (YQ) v. PSF (WO) vi. Passenger service facility charge (SW). vii. Passenger service charge (QX) viii. Passenger Solidarity Charge (IZ). ix. Custom Duty Fee (YC) x. International Transportation Tax (US). xi. Aphis User Fee xii. Federal Inspection Fee (XY). xiii. Security Fee xiv. .....

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s a result of which differential service tax in Col.9 of the said Annexure would be correspondingly reduced. b) There was no liability for paying service tax on the appellant as the show cause notice was issued to M/s Japan Airlines and not to the appellant, namely M/s Japan Airlines International Co. Ltd. and no demand can be confirmed without show cause notice. The Advocate cited the judgment of the High Court of Delhi dated 8.2.2012 in Income Tax Appeal Nos. 07, 2, 3, 4, 5, 8, 10, 11, 17 and .....

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mely, the gross fare. d) CBEC has clarified vide Instruction F.No.B.11/1/2002-TRU dated 1.8.2002 that taxes are not subject to service tax. e) The other charges at serial No.(xx) above are various kinds of taxes/passenger fee paid in different countries as was evident from the following charts submitted during personal hearing: Code No. Details of other Charges Details of Tax Country Name Authority name BP PSC, Departure Tax and contribution International Poverty Korea, Republic of Incheon Inter .....

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enger Service Charge (Domestic) Korea Re public of Korea International Airport Authority K Airline Passenger Levy Jamaica Ministry of Finance and Public Services SG Passenger Service Charge Singapore Civil Aviation Authority BE Passenger Service and Security Charge Belgium Brussels International Airport Com any WY Passenger Service Charge - Intl. Australia Paid to Airport Authority LK Embarkation Fee Sri Lanka Civil Aviation Authority of Sri Lanka AE Passenger Service Charge (Int'l.) United .....

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ion RN Passenger Service Charge Netherlands Ministerie Van Verkeer waterstaat GB Air Passenger Duty (APD) United Kingdom HM Customs & Excise FR Airport Tax France Direction Generale del' Aviation Civile BW Departure Tax Botswana Department of Civil Aviation QX Passenger Service Charge - Intl France Paid to Airport Paris Group xw Airport Tax Poland Poland Airport Head Office CJ Security Service Charge Netherlands Dutch Air orts vv Noise Charge Netherlands Dutch Civil Aviation , Netherland .....

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ntinental Micronesia Inc. JC Passenger Service Charge (International) Viet Nam Civil Aviation Administration of Vietnam CA Air Travellers Security Charge Canada Canada Customs and Revenue Agency DY Tourism Arrival Tax Peru Airport Authority EY Airport Department Tax Fiji Airport Fiji Limited EZ Airport Security Charge Fiji Airports Fiji Limited LK Embarkation Fee Sri Lanka Civil Aviation Authority of Sri Lanka SS Excise Tax Republic of South Sudan Paid to Sudan Government JK Department fee Egypt .....

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o disuse the issue relating to levy of service tax on Airlines and there was no willful, misstatement/suppression of facts on the appellant's part as it had submitted periodical returns and had clearly informed the Revenue Department that it was paying service tax only on the basic air fare. g) As the show cause notice has been issued in terms of the proviso to Section 73, in the absence of willful misstatement/suppression of facts, the entire demand (including that pertaining to the normal .....

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y air service' within 30 days from 1.5.2006 is incorrect as is evident from amended Registration Certificate copy placed at page 60 of the appeal paper book in terms of which this amendment was carried out on 26.5.2006. (i) Gujarat High Court in the case of Raval Trading Company vs. C.S.T. 2016 (42) STR 210 (Gu.)has held that penalty under Section 76 and 78 are mutually exclusive. (j) Fee and taxes are not includible in the assessable value in term of the judgment of the Delhi High Court in .....

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inable. c) As held by CESTAT in the judgment reported in 1983 (14) ELT 1807, as the show cause notice mentioned the period, quantity of goods and rate of duty the show cause is valid. d) As per judgment of CESTAT in the case of British Airways Plc vs. C.S.T., New Delhi - 2013 (29) STR 177 (Tri-Del.) the service tax is payable on the entire amount of receipt for sale of tickets. e) CA certificate regarding nature of miscellaneous expenses cannot be taken cognizance of by CESTAT as it was not prod .....

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plied, it did not supply figures relating to tickets issued prior to 1.5.2006 for the journey performed after 1.5.2006 and the amount collected against cancellation charges during the period 1.5.06 to 31.3.08 although it promised that they would be supplied in due course. 4. We have considered the contentions of both sides. It is true that Annexure A to the show cause notice in column No.5 does state "value on which tax is to be paid" and contains figures equal to gross fare (Col.2) mi .....

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mpugned order, the appellant did not give any evidence regarding amount of money refunded against cancellation of tickets. In quasi-judicial proceedings, deduction can not be allowed in the absence of documentary evidence. Further, jurisprudentially speaking service tax has to be paid with reference to the money received against 'sale of tickets' and subsequent refund on account of cancellation may entitle the appellant for refund subject to meeting various stipulations relating thereto .....

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n the Annexure and this would equivalently and directly impact the differential amount of S.T. shown in column 9 of the Annexure. 5. The components on which demand of service tax has been confirmed are enumerated at serial Nos. (ii) to (xx) above. The appellant has given plausible explanation that the charges mentioned at Sl. No.(v) to (xx) in para 1 comprised only such amounts which were collected to be paid to various authorities in India and abroad. Ld. A.R. for Revenue has raised a point tha .....

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OL - 1481 CESTAT - DEL. (ii) Turkish Airlines vs. C.S.T., Delhi - 2013 (30) STR 367 (Tri-Dei.), (iii) Sri Lankan Airlines (iv) Luftansa German Airlines vs. C.S.T., Delhi - 2016 - TIOL - 1086 CESTAT - DEL. 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 in the case of British A .....

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hat assessable value for charging service tax is the gross amount charged by the service provider for such service. Therefore, these charges clearly constitute part of the gross receipt for rendition of service$. Incidentally, it may be pertinent to mention that the Airlines collectively took up this issue with CBEC which vide letter No.341/52/2006-TRU dated 18.9.2007 addressed to Chairman Board of Airlines Representative in India categorically clarified that fuel surcharge, insurance surcharge .....

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of YQ and YR component in taxable value of service provided by aircraft operator to passenger embarking India for international journey [section 65(105)(zzzo) of the finance Act, 1994]. 2. As per section 67 of the finance Act, 1994, value of a taxable service shall be the gross amount charged by the service provider for the service provided and includes any amount received towards the taxable service before, during or after provision of such service. Provisions relating to determination of the .....

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dia. 3. In view of into above, you are advised to take immediate necessary action to pay the appropriate service tax on above mentioned service provided. For any further clarification on this issue, you may like to contact the jurisdictional service Tax officers. Yours faithfully (K Balamurugan) OSD (TRU) Tel. 23092634" We may hasten to add that we are not basing our finding/conclusion on the basis of CBEC clarification but on the basis of the provisions of Section 67 ibid and have referred .....

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t paid service tax on the basic fare only. Normally, in these circumstances, the allegation of suppression of facts/misstatement may not have been sustainable. However, in the present case, we find that when the Custom Department came to know that service tax was being paid only on basic fare, it wrote to the appellant repeatedly asking for the details regarding the gross amount collected. Paras 2, 3, 4, 4.1. & 4.2 of the impugned order are reproduced below as they clearly bring out the fact .....

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e Service Tax (Determination of Value) Rules, 2006. Accordingly, inquiries were made from the assessee in this regard vide letters dated 17.8.2006, 23.10.06, 9.4.2007 and 207.08 and they were asked to submit the details of break-up of the total value of tickets issued during the period 1.5.2006 to 31.3.2007 against such services provided along with the details of service tax paid. The details were sought separately for the tickets sold/issued and used during the period 1.5.06 to 31.3.2007 and ti .....

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process of preparing the data and would be submitting the same very soon. 4. However, neither reply from the assessee nor any data/details/information was received from the assessee. The assessee vide letter 17.1.08, was again requested to supply the details up to 30.9.07. They were further requested to expedite the details vide letters dated 20.2.08, 5.3.08 and 1.4.08. 4.1 On 1.4.08, Shri Ritesh Gupta, Assistant Manager Administration & Finance, submitted a compact disc (CD) informing that .....

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ed 9.6.08, the assessee supplied the details for the year period May, 06 to September, 07 in the prescribed proforma. However, no details in respect of the tickets sold prior to 1.5.06 but used on or after 1.5.06 were supplied by the assessee and some discrepancies in the details submitted by the assessee were observed. Accordingly, the assessee was requested on 13.6.06 to supply the details nor supplied by them and to depute a well conversant officer to sort out the discrepancies, In reply to t .....

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t appellant deliberately dilly dallied in providing the required information in spite of being asked repeatedly as a consequence of which the Revenue could eventually issue the show cause notice based upon whatever information was belatedly provided by the appellant although it did not provide the entire information which was sought. The provision relating to willful misstatement/suppression of fact have been explained by the Hon'ble Supreme Court in several judgments. For example, in the ca .....

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of CCE Vs. Chemphar Drugs Liniments [2002-TIOL-266-SC-CX], the Supreme Court held that something positive other than mere inaction or failure on the part of the assessee or conscious or deliberate withholding of information when assessee knew otherwise, is required before it is saddled with the liability the extended period. In the case of Continental Foundation Jt. Venture vs. CCE, Chandigarh-l [2007 (216) ELT 177 (SC)], Supreme Court went to the extent of ruling the mere omission to give corre .....

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been held to be invocable the judgment in the case of Infinity Infotech Parks Ltd. vs. UOI (supra) cited by Id. Advocate does not come to the appellant's rescue. 8. The appellant has strenuously contended that the show cause notice was issued to M/s Japan Airlines while the appellant is M/s Japan International Co. Ltd. and therefore, show cause notice was not issued to the appellant and hence no service tax can be demanded on the basis of show cause notice (leading to the impugned order) bec .....

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t judgment dated 8.2.2012 in the case of Jagat Novel Exhibitors Private Limited (supra) may have come to its rescue. However, in the present case we find that show cause notice was issue to "Japan Airlines, Chadralok Building, 36 , Janpath, New Delhi - 110001" and the appellant not only received the show cause notice but also responded thereto in full measure. It received all the communications in the name and address as above responded to those communications, It submitted its defence .....

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