2015 (9) TMI 1218 - HC - Service Tax

Recovery of service tax dues - Sale and disposal of detained aircraft - Detention of Aircrafts and Helicopters belonging to M/s. Kingfisher Airlines to recover Service Tax amount due to the Government - difficulties and availability of records and documents - aircrafts / helicopters are in the custody of Mumbai International Airport Private - third Respondent/owner has no objection to the aircraft being sold and disposed of by the Service Tax Commissioner/Commissionerate. Held that - The said third Respondent would render all assistance in that behalf. However, Mr. Khambata for the appellant seeks leave of this Court to have access to the documents and records in relation to the subject aircraft once the Service Tax Commissioner takes custody and possession of the same. Mr. Khambata submits that this is in order to enable and facilitate the valuation being privately done by the third Respondent and the reports being handed over to the Commissioner which would assist him to determine the upset price. Sale proceeds from the sale of aircraft shall not be disbursed and released but should be brought in this Court. We grant leave to the third Respondent and the learned Counsel appearing for the same to raise this issue once we have the affidavit of the airlines before us.

Issues:
1) Detention of aircraft and helicopters for recovery of Service Tax amount due to the Government.
2) Ownership status of the aircraft in question under financial lease.
3) Appointment of government-approved auctioneer for the auction of the detained aircraft.
4) Custody and charge of documents and records relating to the subject aircraft.
5) Access to records and documents by the Service Tax Department.
6) Valuation and disposal of the aircraft in accordance with the law.
7) Rights and contentions of the third Respondent regarding the sale of the aircraft.

Analysis:
1) The judgment revolves around the detention of aircraft and helicopters belonging to a specific airline to recover Service Tax amounts owed to the Government. The focus is on one aircraft under financial lease, with the Commissioner seeking time to complete the sale and disposal process. The Commissioner's statements, based on records, are accepted as undertakings by the Court.

2) The ownership status of the aircraft is crucial, being under financial lease. The Commissioner plans to appoint a government-approved auctioneer for the auction process, requiring submission of maintenance and audit records by the airline. The Court grants the requested time for valuation and auction preparations.

3) The issue of custody and charge of documents and records related to the subject aircraft arises. The Service Tax Department seeks access to these materials to comply with undertakings given to the Court. The airline confirms the availability of records in various locations accessible to authorized personnel.

4) The Court emphasizes the importance of access to records and documents, directing the airline to file a comprehensive affidavit clarifying the position within two weeks. Cooperation in handing over records and allowing valuation is expected, ensuring compliance with the law.

5) Regarding the rights and contentions of the third Respondent, who owns the aircraft leased to the airline, the Court grants leave for access to documents once the Service Tax Commissioner takes custody. Any valuation reports provided by the third Respondent should assist in determining the upset price for the auction.

6) Throughout the judgment, the Court ensures that all actions are in line with the law and no conflicting orders exist. The rights and contentions of all parties involved are considered, with provisions made to safeguard interests, particularly regarding the sale proceeds from the aircraft auction.

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