2014 (8) TMI 887 - AT - Service Tax

Manpower supply services - extended period of limitation - appellate authority has confirmed the service tax demand of ₹ 2,70,249/- in respect of manpower supply services rendered during June to September, 2005 and set aside the demand pertaining to the said service for the period prior to 01/06/2005 - Held that - Service tax in India prior to 2012 was selective in scope of levy and all activities were not taxed, but only taxable services as defined in law were liable to tax. Even when Airport service was introduced, a service which was not a taxable service, was not liable to service tax under the Airport Service if the said service performed outside the airport or civil enclave was not taxable. A Circular issued by the CBE & C in this regard clarifies this position - if any activity is not taxable service as defined in law, even if it is rendered within the airport, it would not be taxable. That is why the renting of immovable property in an Airport prior to 01.06.2007 was not taxable under the Airport Services since renting of immovable property was not a taxable service. Similarly, there are other services performed in the Airport, such as Porterage Services, Escort services, Wheelchair Services and so on. It is not, the case of the Revenue that they are collecting Service Tax on these services rendered in the Airport as these are not taxable services otherwise. On the same logic, supply of manpower services cannot be taxed prior to 01.06.2005 under the category of Airport Services - operation of order of commissioner not stayed.

Summary

Issues:
1. Service tax demand on "manpower supply services" for the period prior to 01/06/2005.
2. Interpretation of "airport services" under section 65(105)(zzm).
3. Applicability of service tax on services rendered within an airport.
4. Claim for grant of stay on the service tax demand.

Analysis:
1. The appeal challenged an order confirming a service tax demand on "manpower supply services" for the period from June to September 2005, while setting aside the demand for the period prior to June 2005. The Revenue contended that the services provided by the respondent, involving the supply of manpower for cleaning aircraft, fell under "airport services" as defined in the relevant section. The Revenue argued that the services should be taxable both before and after June 2005. The Revenue sought a stay on the order.

2. The Circular issued by the Central Board of Excise and Customs (CBEC) clarified the scope of "airport services," emphasizing that services provided within an airport or civil enclave by authorized entities are taxable. However, activities not falling under taxable services defined by law, even if performed within the airport, are not subject to service tax. The Circular highlighted that certain services, like renting of immovable property, porterage services, escort services, and wheelchair services, were not taxed under "airport services" due to their non-taxable nature. Applying this logic, the supply of manpower services could not be taxed before June 2005 under the category of "Airport Services."

3. The judgment emphasized that activities within an airport were only taxable if they constituted taxable services as defined by law. The renting of immovable property in an airport prior to June 2007 was not taxable under "Airport Services" because "renting of immovable property" was not a taxable service. Similarly, other services like porterage, escort, and wheelchair services were not taxed as they did not fall under taxable services. Therefore, the supply of manpower services could not be taxed before June 2005 under the category of "Airport Services."

4. The Tribunal concluded that the Revenue failed to establish a case for granting a stay on the service tax demand. Consequently, the stay petition was dismissed for lacking merit, affirming the decision to set aside the demand for the period prior to June 2005.

This detailed analysis of the judgment highlights the interpretation of "airport services," the scope of taxable activities within an airport, and the rationale behind the decision to dismiss the stay petition based on the non-taxable nature of the services provided by the respondent before June 2005.