2023 (12) TMI 9 - AT - Service Tax

Classification of service - transportation of passengers by air service or supply of tangible goods service - appellant is engaged in chartering of its Aircraft and is charging the customers for the same on hourly basis referred to as flying hours - extended period of limitation - HELD THAT - The issue has acknowledged to be no more res-integra and to have been decided in the terms that the services in the given circumstances are classifiable, as Supply of Tangible Goods Services which are in tax net since 16.05.2008. Admittedly, the appellant was not discharging its liability since 16.05.2008. However, w.e.f. 01.07.2010 the tax liability has regularly been discharged however considering the impugned services as that of transportation of passengers by air. Simultaneously, it is observed that in the light of the EIH LIMITED VERSUS C.C.E., DELHI-I 2018 (9) TMI 921 - CESTAT NEW DELHI , the appellant was liable to pay the service tax w.e.f. 16.05.2008 but the said demand has been raised vide the Show Cause Notice dated 18.06.2013 i.e. by invoking the extended period of limitation. It is the case of the appellant that they were under the bonafide belief that the services rendered by them are transportation of passengers by air service which was not taxable prior to 01.07.2010. It is also very much apparent that beyond this date the appellants are regularly discharging their service tax liability. Hence, there are no reason to reject the stand taken by the appellants of having a bonafide belief. Nothing is produced by the Department to prove the malafide intent on part of the appellant to evade the tax liability. The mere allegation will not be sufficient for the Department to invoke the extended period of limitation - Extended period is, therefore, held to have been wrongly invoked. Once there was no malafide intent, the question of imposition of penalty does not at all arise. The appellant rather is held entitled to the benefit of Section 80 of the Act. The services in question are held to be Supply of Tangible Goods Services . However Show Cause Notice is held as time barred. Entire demand gets hit by limitation. Hence the order under challenge is hereby set aside - Appeal allowed.

Summary

Issues involved: Determination of tax liability under service tax for services provided by appellant, invocation of extended period of limitation, classification of services as "transportation of passengers by air service" or "supply of tangible goods services."

Tax Liability Determination:
The appellant provided Aircraft/Helicopter on charter hire along with their crew, leading to a dispute on the taxability of services. The Department alleged non-registration and proposed recovery of service tax, interest, and penalties. The appellant contended that their services fall under "transportation of passengers by air service" taxable from 01.07.2010, and not under "supply of tangible goods services" taxable from 16.05.2008. They argued for setting aside the order based on bonafide belief and cited relevant case laws.

Extended Period of Limitation:
The Department invoked the extended period of limitation for raising the demand. The appellant argued against the invocation, stating no suppression of facts and their bonafide belief regarding the classification of services. They relied on various legal precedents to support their stance.

Classification of Services:
The Tribunal deliberated on whether the services provided by the appellant should be classified under "transportation of passengers by air service" or "supply of tangible goods services." Considering past decisions and the appellant's compliance post-2010, it was concluded that the services are classifiable as "Supply of Tangible Goods Services" taxable since 16.05.2008. The Tribunal held the Show Cause Notice as time-barred and set aside the order, allowing both appeals with consequential benefits to the appellants.

Judges' Separate Opinion:
No separate judgment was delivered by the judges in this case.

This summary provides a detailed breakdown of the issues involved in the legal judgment, including the tax liability determination, the invocation of the extended period of limitation, and the classification of services, along with the final decision and relevant arguments presented by both parties.