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M/s Aviacon (India) , Shri Bahadur Chand Gupta & Mrs. Bhateri Devi Versus CCE, Delhi – I

2017 (9) TMI 885 - CESTAT NEW DELHI

Renting of immovable properties - leasing out the fuselage of Airbus alongwith the connected premises of land - whether leasing out aircraft amounts to Business Auxiliary Services or Renting of immovable property services? - Held that: - there are two distinct properties which are given on lease. The lease rental contribution attributable to each one of the property has been categorically stated by the main appellant when the enquiry was conducted. There is no dispute about the consideration att .....

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providing training to the participants and also to make publicity about the status of the training institute. As already noted, the training of cabin crew is imparted both in the class rooms and inside the aircraft for practical exposure. The aircraft in possession of the main appellant serves this very basic infrastructural requirement of the training by the lessee. As such, we find that lease rent attributable to this activity is rightly taxable under business support service. - The secon .....

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operty service on the consideration received by them and clearly admitted by them. - Penalty - Held that: - renting of immovable property service has been a subject matter of substantial litigation, and also the tax entry was interpreted to mean only services “in relation to” renting of not renting per-se - Later, amendments were brought in, in the statutory definitions alongwith retrospective changes also. A specific provision was also made in Section 80 (2) of the Finance Act, 1994 for wai .....

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) And Shri B. Ravichandran, Member (Technical) Shri Atul Gupta, C.A. - for the appellants. Shri Amresh Jain, Authorized Representative (DR) - for the Respondent. ORDER Per: B. Ravichandran All these three appeals are dealing with inter-connected matters and are accordingly taken up for disposal together. The brief facts of the case are that M/s Aviacon India, a proprietorship firm owned by Shri Bahadur Chand Gupta, entered into a lease agreement with M/s Frankfinn Institute of Air Hostess Traini .....

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roceedings were initiated against M/s Aviacon and Mrs. Bhateri Devi, who received rent towards co-owned land/building from Aviacon, to demand and recover service tax under the category of business support service and renting of immovable property service. Based on the details provided by the main appellant, the service tax demand under the category of business support service was made on the consideration attributable to leasing of Air bus aeroplane alongwith infrastructural facilities and under .....

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ant contesting the findings of the lower authority submitted on the following lines :- (a) M/s Aviacon entered into an agreement with M/s Frankfinn. The said agreement is for leasing out the fuselage of Airbus alongwith the connected premises of land. The Revenue cannot split up artificially the said lease into two categories to tax under BAS and renting of immovable property ; (b) leasing out the aircraft cannot be called as business support service. The aircraft is fixed to the earth. Leasing .....

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here is no basis in the claim of the appellant that the property is not used for commercial purpose. The agreement categorically states that the lessee shall use it for commercial purpose. Regarding consideration being taxed under two categories it is submitted that the appellant gave the details under different headings and accordingly the demands were made. The aircraft is used as a training premises and it contains all the requirements for such training to give the real effect of the actual a .....

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been provided on lease rent basis to the lessee who will use it in conjunction with the training, advertisement and other commercial purposes in terms of the agreement. The said activity is clearly covered under renting of immovable property for commercial purpose. 5. We have heard both the sides and perused the appeal records. We note that the main appellant has entered into an agreement with M/s Frankfinn on 05/01/2005. We have perused the agreement in detail. The scope of the agreement is as .....

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ther, Mrs. Bhateri Devi and Mrs. Bhateri Devi has no objection of any nature, whatsoever for carrying out activities enumerated in this agreement in the Premises by the LESSEE. AND WHEREAS the lessor further represents that he can use the Airbus and the premises for commercial purposes. AND WHEREAS the LESSEE is a leading institute in India that provides basic cabin crew/cabin crew training for aspiring Air Hostesses & Flight Stewards/Air Hostesses & Flight Stewards. AND WHEREAS the firs .....

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ly stated by the main appellant when the enquiry was conducted. There is no dispute about the consideration attributable to each one of the property. We do not agree with the appellant that the consideration has been artificially split up and brought under tax liability under two tax entries. When two properties are specifically, identified considering the nature and scope of service for which lease rent is received, we find that the lower authorities are correct in their conclusion. 7. The Airb .....

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by the said tax entry. Support services of business or commerce means services provided in relation to business or commerce and includes evaluation of prospective customers …….. infrastructural support services ………. The explanation below the tax entry gives the scope of the expression infrastructural support services . The same will include providing office alongwith office utilities, lounge, reception with competent personnel to handle messages, secretarial s .....

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cy evacuation etc. These are nothing but infrastructural support for business or commerce of M/s Frankfinn. It is clear that the aircraft premises and the other equipments are very essential and imperative infrastructure for providing training to the participants and also to make publicity about the status of the training institute. As already noted, the training of cabin crew is imparted both in the class rooms and inside the aircraft for practical exposure. The aircraft in possession of the ma .....

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