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2016 (7) TMI 1077 - AT - Service TaxValuation - transport of passengers embarking in India for international journey by air service - service tax was paid only on the basic air fare and without including various charges - Extended period of limitation - Validity of show cause notice - Rule 5(1) of Service Tax (Determination of Value) Rules, 2006, was declared ultra vires by Delhi High Court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. vs. Union of India 2012 (12) TMI 150 - DELHI HIGH COURT . Held that - collection of various elements i.e. fees and taxes levied by various authorities are not to be included in the value. - Decided in favor of assessee on this ground. However, Fuel surcharge (YQ), insurance surcharge (YQ) and insurance & fuel surcharge (YR) are not the amounts collected to be reimbursed to any agencies. Section 67 of Finance Act, 1994 provides that assessable value for charging service tax is the gross amount charged by the service provider for such service. Therefore, these charges clearly constitute part of the gross receipt for rendition of services. - Decided against the assessee. Extended period of limitation - Held that - , it is evident that appellant deliberately dilly dallied in providing the required information in spite of being asked repeatedly as a consequence of which the Revenue could eventually issue the show cause notice based upon whatever information was belatedly provided by the appellant although it did not provide the entire information which was sought. - Decided against the assessee. Validity of show cause notice - The appellant has strenuously contended that the show cause notice was issued to M/s Japan Airlines while the appellant is M/s Japan International Co. Ltd. and therefore, show cause notice was not issued to the appellant and hence no service tax can be demanded on the basis of show cause notice (leading to the impugned order) because there is no provision in the service tax law similar to Section 290 B of the Income Tax Act. - Held that - the purpose of show cause notice (resulting in impugned order) has been fully and eminently served in this case and the impugned order has been issued in full and complete compliance of the principles of natural justice. In these circumstances, this contention is too flimsy to be of any consequence whatsoever. - Decided against the assessee. Decided partly in favor of assessee.
Issues Involved:
1. Calculation errors in service tax demand. 2. Validity of the show cause notice. 3. Basis for computing differential tax. 4. Inclusion of various charges in the assessable value. 5. Allegations of willful misstatement/suppression of facts. 6. Imposition of penalties under Sections 76 and 78. Issue-wise Detailed Analysis: 1. Calculation Errors in Service Tax Demand: The appellant argued that the total service tax calculated in Annexure A of the show cause notice was incorrect. The correct total should be ?6,16,52,181 instead of ?6,20,48,923, impacting the differential service tax amount. The Tribunal acknowledged the totaling mistake and directed that the correct figure should be considered in the de novo adjudication. 2. Validity of the Show Cause Notice: The appellant contended that the show cause notice was issued to "M/s Japan Airlines" instead of "M/s Japan Airlines International Co. Ltd." The Tribunal found this argument unpersuasive because the appellant had fully participated in the proceedings, thus fulfilling the purpose of the show cause notice and complying with principles of natural justice. 3. Basis for Computing Differential Tax: The appellant argued that the differential tax should be computed on the difference between the gross fare and refunds, not on the gross fare alone. The Tribunal held that service tax should be paid on the gross amount received for ticket sales, and subsequent refunds could entitle the appellant to a refund subject to conditions. The Tribunal found no legal infirmity in computing service tax on the gross receipt. 4. Inclusion of Various Charges in the Assessable Value: The Tribunal analyzed whether charges listed from (ii) to (xx) should be included in the assessable value for service tax: - Charges from (v) to (xx) were found to be non-includible as they were collected to be paid to various authorities, supported by previous CESTAT judgments. - Fuel surcharge (YQ), insurance surcharge (YQ), and insurance & fuel surcharge (YR) were includible in the assessable value as they were part of the gross amount charged for the service, supported by Section 67 of the Finance Act, 1994, and a CBEC clarification. 5. Allegations of Willful Misstatement/Suppression of Facts: The Tribunal found that the appellant had deliberately delayed providing required information to the Revenue despite repeated requests. This amounted to suppression of facts, justifying the invocation of the extended period for demand. The Tribunal referenced several Supreme Court judgments to support this conclusion. 6. Imposition of Penalties under Sections 76 and 78: The Tribunal referred to the Gujarat High Court judgment in Raval Trading Co., which held that penalties under Section 76 should not be imposed if a penalty under Section 78 is imposed. The Tribunal directed that this principle should be followed in the de novo adjudication. Conclusion: The appeal was allowed by way of remand for de novo adjudication with specific directions: - The demand related to charges from (v) to (xx) is not sustainable. - The extended period for demand is invocable. - The totaling mistake in Annexure A should be corrected. - Penalty under Section 76 should not be imposed if a penalty under Section 78 is imposed. - The appellant should be given an opportunity to be heard before the de novo adjudication.
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