2013 (9) TMI 182 - AT - Service Tax

Supply of Tangible Goods section 65(105)(zzzj) - The appellant hired aircraft from a foreign company for the purpose of rendering cargo services in India Held that - The transaction in question did not match the definition of taxable service - the aircraft was operated for cargo aviation purposes in India - maintenance and repairs were undertaken - the appellant exercised control for operational purposes only and such control cannot be considered to be effective control - the possession of the aircraft was transferred to the appellant. Waiver for pre- deposit allowed and stay granted as the appellant proves prima facie case in their favor.

Summary

Issues:
1. Applicability of service tax on the supply of tangible goods under Section 65(105)(zzzzj) of the Finance Act, 1994.
2. Interpretation of "effective control" in the context of possession and operation of aircraft.
3. Consideration of previous Stay Order in a similar case for granting waiver and stay.

Analysis:
1. The primary issue in this judgment revolves around the applicability of service tax on the supply of tangible goods, specifically focusing on the hiring of aircraft for cargo services. The appellant contested that the possession and effective control of the aircraft were with them during the material period, thus not falling under the definition of "taxable service" as per Section 65(105)(zzzzj) of the Finance Act, 1994.

2. The interpretation of "effective control" played a crucial role in determining the tax liability. The respondent argued that the appellant's control over the aircraft was limited to operational purposes, which cannot be categorized as "effective control." However, the tribunal observed that the appellant's possession of the aircraft, its operation for cargo services in India, crew management, maintenance, and repairs indicated prima facie that effective control was indeed exercised, leading to the conclusion that the transaction did not align with the taxable service definition.

3. Additionally, the appellant presented a previous Stay Order in their favor, citing Article 366(29A) of the Constitution of India. While considering this precedent, the tribunal independently assessed the facts and circumstances of the case and found a prima facie case in favor of the appellant. Consequently, the tribunal granted the waiver and stay requested by the appellant based on their own analysis and reasoning, separate from the previous Stay Order.

In conclusion, the judgment delves into the nuanced aspects of service tax applicability, the definition of "effective control" concerning tangible goods supply, and the significance of previous orders in determining current outcomes. The tribunal's detailed analysis and independent evaluation led to the decision to grant waiver and stay to the appellant based on the presented facts and legal interpretations.