2013 (10) TMI 1268 - AT - Service Tax

CENVAT credit - duty paying documents - Ineligible documents - Held that - The learned advocate submits that the entire amount of CENVAT credit has been reversed with interest and the amount has been appropriated. However in appeal, the appellant is challenging the decision regarding reversal. Therefore, we consider that the reversal of CENVAT credit with interest is sufficient for the purpose of pre-deposit to hear the appeal - stay granted Classification of service - aircrafts taken on lease from the foreign company - supply to tangible goods service or transportation of passenger by air service - taxability - period from 2006-07 to 2008-09 - held that - While the appellant was receive certain minimum fixed monthly charges on account of certain minimum flying hours per calendar month, in addition to this, they also receive remuneration on per hour basis during the period when the helicopter had been operated for transportation - Prima facie the appellant s activity is transportation or persons within India by air and not supply of tangible goods and as such during the period of dispute the same was not taxable - Following decision of Mesco Airlines Ltd. Versus CST New Delhi 2013 (3) TMI 522 - CESTAT NEW DELHI - stay grated. Maintenance or repair of aircrafts for the period from 1.1.2008 to 7.10.2008 - Held that - prior to this period up to March 2008, the appellant had produced evidence to show that M/s. Kingfisher had paid the service tax on these operations and for the subsequent period also M/s. Kingfisher airlines was liable to pay according to the agreement between the parties and moreover M/s. Deccan Charters Ltd. was not an independent entity and cannot be considered as an independent entity unless they receive a permit from DGCA. The issue requires detailed consideration of the provisions - stay granted.

Summary

Issues involved:
1. Eligibility for CENVAT credit on ineligible documents.
2. Liability to pay service tax on leased aircrafts.
3. Liability to pay service tax on renting out aircrafts.
4. Liability to pay service tax on maintenance or repair of aircrafts.

Issue 1: Eligibility for CENVAT credit on ineligible documents
The appellant challenged the decision regarding the reversal of CENVAT credit on ineligible documents amounting to Rs.55,50,368/-. The appellant reversed the entire amount of CENVAT credit with interest and appropriated the amount. The Tribunal considered the reversal of CENVAT credit with interest as sufficient for the purpose of pre-deposit to hear the appeal.

Issue 2: Liability to pay service tax on leased aircrafts
The question was whether the appellant is liable to pay service tax of Rs.2,73,62,486/- on aircrafts leased from a foreign company, considering it as receiving the service of supply of tangible goods. The appellant demonstrated that they retained possession and control of the aircraft during the lease period, establishing a prima facie case. Therefore, a waiver was granted in this regard.

Issue 3: Liability to pay service tax on renting out aircrafts
The issue revolved around whether the appellant should pay service tax for renting out aircrafts to various companies. The department viewed these transactions as 'supply of tangible goods,' while the appellant argued it falls under 'air transportation service.' Citing a Tribunal decision, the appellant's service was classified as 'air transport service,' warranting a waiver of pre-deposit for the demand of Rs.3,47,62,486/-.

Issue 4: Liability to pay service tax on maintenance or repair of aircrafts
The appellant contested the liability to pay service tax on the maintenance or repair of aircrafts from 1.1.2008 to 7.10.2008. The argument was based on the payment of service tax by another entity for the same services, the operational status of M/s. Deccan Charters Ltd., and the effective date as per the agreement and statutory provisions. The Tribunal acknowledged the complexity of the issue, emphasizing that if service tax was already paid for the same service, the appellant should not be subject to double taxation. Consequently, a waiver of pre-deposit was granted for all dues, and a stay against recovery was ordered during the appeal's pendency.