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2012 (7) TMI 670 - AT - Service TaxValuation - inclusion of statutory fees and levied - Transport of passengers embarking in India for International journey by Air Service - Demanding Service Tax amounting to ₹ 1,22,91,57,595/- for period 1.5.2006 to 30.9.2007 and ₹ 6,16,96,722/- for tickets sold prior to 1.5.2006 but used for journey afterwards - held that - In the present case appellant has not come forward to show that it fulfilled all the conditions of Rule 5(2). Therefore under Section 67 of the Finance Act and Rule 5 of the Service Tax (Determination of Value) Rules, 2006 no benefit can be given to the appellant on account of statutory levies and charges and the confirmation of demand on these charges by the Commissioner is liable to be upheld. - Decided against the assessee. Levy of service tax on tickets sold before 1.5.2006 and used after 1st May 2006. - held that - Tribunal in the case of CCE v. Krishna Coaching Institute (2008 (10) TMI 34 - CESTAT NEW DELHI) has held that since service tax liability on commercial training and coaching institutes arising from 1.7.2003, tax on advance received prior to such date for service provided after said date is leviable, Tribunal in the case of CCE v. Ashok Singh Academy (2009 (8) TMI 288 - CESTAT, NEW DELHI) following the decision of the Krishna Coaching Institute (2008 (10) TMI 34 - CESTAT NEW DELHI) upheld the demand on advances received prior to 1.7.2003 holding that taxable event in service tax is providing of the service. Following these decisions accordingly, we uphold the confirmation of demand of service tax and cess by the Commissioner with regard to the air ticket sold prior to 1.5.2006 and journey undertaken on 1.5.2006 or thereafter. - Decided against the assessee. Self adjustment of excess service tax paid by the appellant on account of cancellation of tickets - held that - Since the appellant is ready to produce all the details, this finding of the Commissioner on denial of the self adjustment is set aside and the matter is remanded back to the Commissioner on the issue of self adjustment of the service tax paid by them on account of cancellation of tickets after giving an opportunity of hearing to the appellant. Penalty - held that - appellant was collecting the service tax on basic fare from the passengers but not depositing the amount with government and then service tax was deposited with government after 15 months attracting the provisions Section 76 of the Finance Act. Similarly taxable value showing the service in tax Returns filed by appellant to the department was also suppressed and in some of the months no value of the taxable service was shown in the Returns. Therefore, there was clearly suppression of the taxable value attracting provisions of Section 78 of the Finance Act. - Penalty levied but an option given to pay the penalty equal to the 25% of the deposited tax amount within 30 days The penalty with regard to levy of service tax on fuel and insurance charges, on tickets issued prior to 1.5.2006 and on the component of statutory levies and charges is set aside.
Issues Involved:
1. Demand of Service Tax and Education Cess. 2. Demand of Higher and Secondary Education Cess. 3. Demand for excess amount collected under Section 73A. 4. Demand for interest on delayed payment under Section 75. 5. Imposition of penalties under Sections 76, 77, and 78. 6. Service tax on statutory levies and charges. 7. Service tax on tickets sold before 1.5.2006 but used after 1.5.2006. 8. Self-adjustment of service tax on canceled tickets. Issue-wise Detailed Analysis: 1. Demand of Service Tax and Education Cess: The appellant was engaged in providing "Transport of passengers embarking in India for International journey by Air Service," which became taxable from 1.5.2006. The department found that the appellant was not paying service tax on the gross value of services provided. The appellant started paying service tax on the basic fare from October 2006 and later on fuel/insurance surcharges after a CBEC clarification in September 2007. The appellant paid Rs. 95,78,63,497/- plus interest Rs. 10,19,30,747/- towards the basic fare component and Rs. 7,15,49,076/- plus interest Rs. 1,12,76,408/- for fuel/insurance surcharges. 2. Demand of Higher and Secondary Education Cess: The demand for Higher and Secondary Education Cess amounting to Rs. 45,26,210/- was confirmed by the Commissioner. The appellant disputed this, arguing that statutory levies and charges should not be included in the taxable value. However, the Tribunal upheld the demand, stating that the statutory charges collected by the appellant form part of the gross amount of the air ticket under Section 67 of the Finance Act. 3. Demand for Excess Amount Collected under Section 73A: The department found that the appellant collected service tax on the basic fare but did not deposit it with the government. The appellant argued that there was confusion in the industry regarding the taxability of various components of the fare. The Tribunal upheld the demand for the excess amount collected under Section 73A. 4. Demand for Interest on Delayed Payment under Section 75: The appellant paid Rs. 1,06,98,96,120/- along with interest Rs. 10,19,30,747/- during the investigation. The Tribunal upheld the demand for interest on delayed payment under Section 75. 5. Imposition of Penalties under Sections 76, 77, and 78: The Tribunal found that the appellant collected service tax on the basic fare but did not deposit it with the government, which attracted penalties under Sections 76 and 78. However, the Tribunal noted that there was confusion regarding the taxability of fuel/insurance surcharges and statutory levies, and thus, no penalty was imposable on these components. The Tribunal also provided the appellant with an option to pay a reduced penalty of 25% of the tax amount on the basic fare within 30 days. 6. Service Tax on Statutory Levies and Charges: The appellant argued that statutory levies and charges should not form part of the consideration for the services rendered. The Tribunal found that these charges form part of the gross amount of the air ticket under Section 67 of the Finance Act and upheld the demand for service tax on these charges. 7. Service Tax on Tickets Sold Before 1.5.2006 but Used After 1.5.2006: The appellant contended that no service tax should be levied on tickets sold before 1.5.2006. The Tribunal found that the taxable event is the provision of service, which occurred after 1.5.2006, and upheld the demand for service tax on these tickets. 8. Self-Adjustment of Service Tax on Canceled Tickets: The appellant claimed a self-adjustment of Rs. 14,48,81,180/- for service tax paid on canceled tickets. The Tribunal remanded the matter back to the Commissioner for verification of the appellant's claim, as the Commissioner had denied the adjustment due to a lack of documentary evidence. Conclusion: The Tribunal upheld the confirmation of demand for service tax and cess on statutory levies and charges and on tickets sold before 1.5.2006 but used after 1.5.2006. The Tribunal remanded the issue of self-adjustment of service tax on canceled tickets back to the Commissioner for verification. The Tribunal also provided the appellant with an option to pay a reduced penalty of 25% of the tax amount on the basic fare within 30 days and set aside the penalties on fuel/insurance surcharges and statutory levies. The appeal was disposed of accordingly.
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