2019 (10) TMI 1110 - AT - Service Tax

Transportation of by air service - demand of service tax on charges made for excess baggage carried by the passengers in the regular flights - HELD THAT - The issue has already been decided in the case of KINGFISHER AIRLINES LTD, JET AIRWAYS LTD. VERSUS COMMISSIONER OF SERVICE TAX 2015 (11) TMI 54 - CESTAT MUMBAI (LB) where it was held that Excess baggage charges collected by the appellant Airlines is integral part of the service provided for transport of passengers by Air' - no service tax can be demanded on the said charges and the demand is said count is set aside. CENVAT credit - services availed prior to start of their actual operations - period of 2005-06 - HELD THAT - The appellant has already disclosed and debited the amount inadmissible to them, and for the balance amount, the appellants have relied on the decisions of M/S VAMONA DEVELOPERS PVT LTD VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, PUNE-III 2015 (12) TMI 1111 - CESTAT MUMBAI , M/S. BEICO INDUSTRIES PVT. LTD. AND SHRI SHANKARANAND SUDHAKAR PATHAK VERSUS CCE. ST. - VAPI 2014 (8) TMI 14 - CESTAT AHMEDABAD , M/S LARSEN TOUBRO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI 2017 (5) TMI 390 - CESTAT MUMBAI and CITY CENTRE MALL NASHIK PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, NASHIK 2017 (11) TMI 301 - CESTAT MUMBAI . Reimbursement of certain expenses - Service of manpower recruitment and supply - Reverse charge mechanism - taxability - HELD THAT - It is seen that the impugned order does not deny that the amount paid by the appellant is in the nature of reimbursement. On perusal of the contract also shows that only excess insurance charges have to be reimbursed on actual basis - No demand in respect of such reimbursements can be made. Consequently, this demand of service tax is also set aside. Since, all the demands have been set aside, no penalties can been imposed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand of service tax on excess baggage charges.
2. Demand of Cenvat credit for services availed prior to actual operations.
3. Service tax on manpower recruitment and supply reimbursement.

Analysis:
1. The first issue concerns the demand of service tax on charges for excess baggage carried by passengers. The appellant argued that no service tax should be levied as they provide a single service to passengers, with extra charges only for excess luggage. They cited a Tribunal decision and Supreme Court approval in a similar case to support their stance. The Tribunal ruled in favor of the appellant, setting aside the demand for service tax on excess baggage charges.

2. The second issue revolves around the demand of Cenvat credit for services availed before the commencement of operations. The appellant claimed Cenvat credit for setting up operations, citing various decisions to support their position. The Tribunal referred to a case where denying Cenvat credit was deemed unsustainable, setting aside the demand for Cenvat credit in this case as well.

3. The third issue pertains to service tax on reimbursement of certain expenses related to manpower recruitment and supply. The appellant argued that the reimbursement was for excess insurance charges only and should not be taxed. Citing relevant court decisions, the Tribunal agreed with the appellant, setting aside the demand for service tax on the reimbursement. As all demands were set aside, no penalties were imposed, and the appeal was allowed accordingly.