TMI Blog2018 (8) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... med the classification of their service as Transportation of Passengers by Air Service. But, the Tribunal after very detailed discussion of the facts and various case law on the subject as well as CBEC Circular No. 20/2009 dt. 09.02.2009 came to the conclusion that the services will be rightly classifiable under the category of “Supply to Tangible Goods Service” - Thus, the classification of the service under the category of STGS upheld. Time Limitation - Held that:- The show cause notice dated 21.03.2011 has rightly invoked the extended period of limitation for raising service tax demand - The second SCN dated 24.04.2012 has been issued for demand of Service Tax only within the normal time limit. But the normal time limit at the relevant time (upto 28.05.2012) was one year. Hence, demand falling beyond one year period for SCN dated 24.04.2012, cannot be sustained and is set aside. Appeal disposed off. - S. T. Appeal No. 60344 of 2013 - ST/A/52566/2018-CU[DB] - Dated:- 20-7-2018 - Mr. V. Padmanabhan, Member (Technical) And Mr. Ajay Sharma, Member (Judicial) Sh. Akhil Gupta, Advocate for the appellant Sh. G. R. Singh, AR for the Respondent ORDER Per: V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove background, we heard Sh. Akhil Gupta, ld. Advocate for the appellant as well as Sh. G. R. Singh, ld. AR for the revenue. 4. The arguments of the Ld. Advocate are summarised below: i) The services of the appellant are confined only to transport of passengers by air and nowhere extend to supplying the aircraft for use by the passengers at their disposal. Therefore, services of the appellant are classifiable under Transport of Passenger by Air Service for non-scheduled flights; ii) Even DGCA regards and considers services of the appellant as non-scheduled air transport (passenger) services and not as non-scheduled air transport (charter) services. Being the regulatory authority, determination of DGCA should be considered. iii) Transport of Passenger by Air Service is a specific entry for taxing non-scheduled flight operations and should be preferred over a general entry of Supply of Tangible Goods ; iv) Extended period of limitation should not be invoked considering that the issue involved is related to classification. Moreover, SCNs were issued after substantial lapse of time though nature of services were known to the Revenue Department. 4.1 In this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant, the aircraft is made available under charter hire as per the terms and conditions attached to the invoice issued in favour of the organisation hiring the aircraft. We have perused Invoice No. 14:09:10 dated 18.12.2009 which is issued in favour of M/s Aviation Services India, New Delhi. As per the said invoice the helicopter has been chartered for the period 06.12.2009 to 17.12.2009 for flying time of 32:05 hrs. for use in Delhi-Ranchi and local flying in Jharkhand Ranchi - Delhi. From the above invoice it is evident that the entire helicopter has been given on hire for the use of charterer. It is evident from the other terms and conditions that the same is supplied alongwith licenced/ trained pilot and necessary engineering crew to operate the helicopter. It is noteworthy that individual seat is not offered by the appellant but the complete aircraft. Further, the aircraft has been allowed to be used by the charterer but the effective control and possession remains with the appellant. The appellant will charge the charterer on the basis of the actual time consumed on engine on to engine off. 7. We note that an identical issue regarding charter hire of helicopter ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e services rendered the appellants were eligible for remuneration on a fixed monthly charge basis for thirty six months plus flying hourly charges. The helicopters were to be operated upon by the crew provided by the appellant and such crew have complete control over the actual flying operations. The agreement with Trans Ocean Offshore Deepwater Drilling Inc. was also for providing charter service to the company by the appellant. The said agreement also envisaged operation of the aircraft for the transportation of the passengers and passenger baggage as per the instructions and requirements of the client, the crew was to be provided by the appellant and all approvals, licences, permits was the responsibility of the appellant. For the services rendered consideration was paid to the appellant in terms of the said agreement. In both these agreements the liability to pay taxes and dues was on the appellant and also the liability to insure the goods. From the tenor of the agreement and the terms and conditions provided therein, especially those specified in clauses - 1.11 relating to equipment/materials/goods, 1.14 relating to mobilization, 3 relating to delivery, 4 relating to service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person in relation to mining of mineral, oil or gas, services covered by entry (zzzzj) can be identified by the presence of two characteristics namely (a) supply of tangible goods including machinery, equipment and appliances for use, (b) there is no transfer of right of possession and effective control of such machinery, equipment and appliances. According to the members of the 1st petitioner, they supply offshore support vessels to carry out jobs like anchor handling, towing of vessels, supply to rig or platform, diving support, fire fighting etc. Their marine construction barges support offshore construction, provide accommodation, crane support and stoppage area on main deck or equipment. Their harbour tugs are deployed for piloting big vessels in and out of the harbour and for husbanding main fleet. They give vessels on time charter basis to oil and gas producers to carry out offshore exploration and production activities. The right of possession in and effective control of such machinery, equipment and appliances is not parted with. Therefore, those activities clearly fall in entry (zzzzj) and the services rendered by the members of the 1st petitioner have been specifically b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Finance Act, 1994 does not apply to services provided by the members of the 1st petitioner .. The ratio of the above decision applies equally well to the facts of the present case. The above decision of the Hon ble High Court was affirmed by the Hon ble Apex Court also. In that view, supply of helicopters on charter hire basis would merit classification under supply of tangible goods for use service and we hold accordingly. 6.5 The appellant s contention that they have undertaken the services of transport of passengers by air and not supply of tangible goods for use is not borne out from the terms and conditions of the agreement entered into with the clients. It is the appellant s contention that they have the licence to fly the aircraft and even charter hiring of aircraft is covered under aircraft services as defined in Civil Aviation Rules and therefore, it should be treated that the appellant has undertaken non-scheduled air transport services for their clients and not as supply of tangible goods for use. To be eligible for classification under air transportation of passengers service, the service has to be rendered to a passenger. An identical issue came u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is right for the benefit of third party companies is, in turn, evident from the written submissions dated 23-3-2011 filed by the appellants advocates, which read thus : even Heligo Charters Pvt. Ltd., in turn, charter the aircraft . The aircraft is chartered by many offshore and oil companies to ferry their personnel .. the aircraft has been used by independent third party offshore oil extraction/drilling companies . The flights undertaken by aircraft are commercial, revenue flights paid for by third party offshore companies. Obviously the end-users of the helicopter are the so-called third party companies which cannot be called members of the public . Popular dictionaries of English provide the following meaning of public or the public , as the case may be :- public = the community or people in general [Collins Dictionary of the English Language] public = the people as a whole, community at large [New World Dictionary of the American Language] public = people collectively [The New Shorter Oxford English Dictionary] public = ordinary people in general; the community [Concise Oxford English Dictionary - Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transport service lies in the simple fact that one is scheduled while the other is non-scheduled , which would mean that scheduled air transport services involve flight services operated on the basis of a schedule of time whereas non-scheduled air transport services are without any time schedule for the flights. [This view is fortified by clause (9.2) of Passenger CAR , which deals with non-scheduled operators and their operations and says: In such operations, the operators shall not publish their time schedules as the operations are of non-scheduled nature.] Other features are common for both scheduled and non-scheduled services. It would follow that, like scheduled air transport service (passenger), non-scheduled air transport service (passenger) also should be open to use by members of the public. As the flight operations in this case were not open to the public, the helicopter cannot be held to have been used for non-scheduled (passenger) services. 24.8 As condition No. 104 itself refers to Rule 3 of the Aircraft Rules, 1937 in the context of defining the expression non-scheduled (passenger) services , it is permissible to take aid of the said Rule in ascertai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reject the contention of the appellant in this regard. Consequently, we hold that the services rendered by the appellant in the instant case cannot be treated as air transport services for the transport of passengers. 6.6 The C.B.E. C. had also occasion to examine the issue and vide Circular No. 20/COMMR.(S.T.)/2009, dated 9-2-2009 the Board clarified, inter alia, as follows : It has been brought to the notice of the Board that many non-scheduled operator engaged in the business of giving the right to use the aircraft to its customers (Chartering of Aircrafts) are not paying service tax. The issue has been examined in the Board. With effect from 16-5-2008, service provided to any person by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances is taxable service under section 65(105)(zzzj). Chartering of aircrafts by a client only confers him with the right to use the aircraft and the owner of the aircraft in such case does not transfer right of possession. As to whether effective control over the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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