TMI Blog2022 (1) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... t for any purpose based on its description that the most specific description shall be preferred over a more general description. In any view of the matter, the most specific description of the service rendered by the appellant is STG. The services rendered by the appellant in charter hire of helicopters to various corporates for offshore operations is classifiable under supply of tangible goods for use service - the demand of service tax under the said category along with interest thereon is upheld. However, wherever the appellant has not collected service tax separately from the customers, the consideration received shall be treated as cum-tax and the service tax demand ought to be recomputed - the imposition of penalties on the appellant under Sections 76 77 of the Finance Act, 1994 for the default in payment of service tax and for non-compliance of statutory provisions relating to the service tax is upheld - the penalties imposed under Section 78 of the Finance Act, 1994 is set aside. Appeal allowed in part. - Service Tax Appeal No. 53107 - 53108 of 2016 - Final Order No. 50053-50054/2022 - Dated:- 24-1-2022 - MR. DILIP GUPTA, PRESIDENT AND MR. P.ANJANI KUMAR, MEM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngers by air and commercial training and coaching . 6. The issue involved in these appeals is as to whether the services provided by the appellant would be taxable under the head transportation of passengers by air [TPA] which became taxable w.e.f. 01.07.2010 or would be taxable under supply of tangible goods [STG] w.e.f 16.05.2008. 7. In order to appreciate the contentions that have been advanced by the learned counsel for the appellant and the learned authorised representatives appearing for the Department, it would be necessary to examine the taxable services provided under the head TPA‟ as contended by the appellant and STG‟ as contended by the Department. 8. Prior to 01.07.2010, TPA‟ was a taxable service defined in section 65(105)(zzzo) of the Finance Act in relation to transport of a passenger embarking in India for international journey. It is reproduced below: Section 65(105)(zzzo) taxable service means any service provided or to be provided to any passenger, by an aircraft operator, in relation to scheduled or non-scheduled air transport of such passenger embarking in India for international journey, in any clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both for scheduled and non scheduled transport operator was taxable w.e.f. 16.05.2008 but it was subjected to levy of service tax for domestic travel also w.e.f. 01.07.2010. 15. The order passed by the Commissioner (Appeals) notices the following facts: (i) In order to ascertain the veracity of the contents of the appellant, I have carefully gone through the impugned order and find that in para E7.4 at page 56, the original authority has observed as under: I note that the notice claimed to have paid service tax of ₹ 28,83,093 for the period 2009-10 to 2013-14 under Air Transport of Passenger Services (year wise service tax amount can be tabulated as per table below): Financial Year Service tax paid under Air Transport of Passenger Services as claimed in their submissions 2008-09 Nil 2009-10 3,89,809 2010-11 4,73,089 2011-12 6,41,658 2012-13 8,43,505 2013-14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the facts of the case when analyzed in the context of the contents of the above circular and definition given under Section 65(105) (zzzzj) of Finance Act, 1994, it can be seen that the Appellants are actually providing the services under the category of Supply of tangible goods services‟ and therefore the question of classifying the same under different category of taxable services does not hold. One must appreciate that at the relevant point of time (upto 30.06.2012) taxable services were defined separately under clause (105) of Section 65 of the Finance Act, 1994 and the principles of classification were mentioned in Section 65A which stated that the real nature and the substance of the transaction and not merely the form of transaction should be the guiding factor for deciding the classification and therefore the said services are taxable and are appropriately classifiable under Section 65(105) (zzzzj) of Finance Act, 1994. Even after the introduction of negative regime, by virtue of the facts of the case, the conditions of the agreement (as opined in the impugned order), details given in the invoices and also the fact that the right of possession and effective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsistence on their part to deliberately classify their services under a different head shows their intention of escaping their liability for the previous period which amount to non-compliance with statutory obligations. The Appellants have relied upon various case laws but in the instant case the facts of the case are different and there is nothing on record to suggest that the circumstances/conditions as prevailed in the cited judgment are also existing vis- -vis the present case. In the cases relied upon the Appellants, there is a certain element of technical or venial breach of a provision of law on the part of the concerned party which in turn has served as a pointer of bona-fide default on the part of that party, but in the instant case, the intentional mis-classification of the services rendered cannot be termed as a technical or venial breach of any provision on their part. As discussed above, the Appellants have also failed in proving their bona-fide in as much as the fact that they knew the exact classification of the services rendered by them and still failed to discharge their tax liability under the proper classification. It is not a case where there was any confusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erala vs. Larsen Toubro Ltd. [ 2015 (39) S.T.R. 913 (S.C.) ] and the decision of the Delhi High Court in Airport Retail Pvt. Ltd. vs. Union of India; (ii) Taxability cannot be based on a Circular while deciding taxability of service. In Global Vectra Helicorp Ltd. vs. Commissioner of S.T., Mumbai-II [ 2016 (42) S.T.R. 118 (Tri.-Mumbai) ] pronounced on 22.01.2015 the judgment of the Supreme Court in Federal Bank Limited pronounced on 18.02.2016 was not available and, therefore, the Tribunal classified the services following the law laid down by the Bombay High Court in Indian National Shipowners‟ Association vs. Union of India [ 2009 (14) S.T.R. 289 (Bom.) ] pronounced on 23.03.2009. However, the Tribunal failed to appreciate the observations made by the Bombay High Court in paragraph 40 of the judgment in Indian National Shipowners‟ Association; and (iii) The Commissioner (Appeals) completely failed to appreciate the contentions advanced on behalf of the appellant and, therefore, passed the order in a mechanical manner. 18. Shri Rakesh Kumar and Dr. Radhe Tallo, learned authorised representatives appearing for the Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted. It has been found by the Commissioner (Appeals), on a perusal of the various invoices, that it was the aircraft/helicopter that was hired against money consideration which was a lump-sum amount irrespective of the number of passengers, as even the details of the passengers were not indicated in the invoices. No document has been shown by learned counsel for the appellant which may dispel this finding. If passengers were to be transported, certainly tickets would have been issued to them and the invoices would also indicate the amount received from the individual passengers, but it is not so. 24. It would be useful to refer to the Circular dated 09.02.2009 issued by the Board to clarify the situation. It is 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 tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the required services. The Member (Technical) also noticed that the helicopters were operated by the crew provided by the appellant and such crew had complete control over the actual flying operations and for the services that were rendered consideration was also paid to the appellant in terms of the agreement. The Member (Technical) also examined the Circular dated 09.02.2009 issued by the Board. The Member (Judicial) agreed with the Member (Technical) that classification of services would be under STG, but did not agree on the imposition of the penalty. The difference of opinion in regard to the imposition of penalties was, therefore, referred to a third Member, who gave his opinion on the basis of which the following Final Order was passed. FINAL ORDER 23. In the light of the majority decision, we pass the following orders : (i) We hold that the services rendered by the appellant in charter hire of helicopters to various corporates for offshore operations is classifiable under supply of tangible goods for use service. Consequently, we uphold the demand of service tax under the said category along with interest thereon. However, wherever the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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