2018 (8) TMI 252 - AT - Service Tax

Classification of services - transport of passengers by air - whether the activity carried out by the appellant will fall under the category of STGS under Section 65(105)(zzzzj) or under Section 65(105)(zzzo) under the category of Transportation of Passengers by Air within India? - Held that - The entire helicopter has been given on hire for the use of charterer. It is evident from the other terms and conditions that the same is supplied alongwith licenced/ trained pilot and necessary engineering crew to operate the helicopter. It is noteworthy that individual seat is not offered by the appellant but the complete aircraft. Further, the aircraft has been allowed to be used by the charterer but the effective control and possession remains with the appellant. The appellant will charge the charterer on the basis of the actual time consumed on engine on to engine off. An identical issue regarding charter hire of helicopter came up before the Tribunal in the case of Global Vectra Helicorp Ltd. vs. CC (Import) Mumbai 2015 (2) TMI 974 - CESTAT MUMBAI (LB) , in that case the appellant therein claimed the classification of their service as Transportation of Passengers by Air Service. But, the Tribunal after very detailed discussion of the facts and various case law on the subject as well as CBEC Circular No. 20/2009 dt. 09.02.2009 came to the conclusion that the services will be rightly classifiable under the category of Supply to Tangible Goods Service - Thus, the classification of the service under the category of STGS upheld. Time Limitation - Held that - The show cause notice dated 21.03.2011 has rightly invoked the extended period of limitation for raising service tax demand - The second SCN dated 24.04.2012 has been issued for demand of Service Tax only within the normal time limit. But the normal time limit at the relevant time (upto 28.05.2012) was one year. Hence, demand falling beyond one year period for SCN dated 24.04.2012, cannot be sustained and is set aside. Appeal disposed off.

Summary

Issues Involved:
1. Classification of the service provided by the appellant.
2. Applicability of the extended period of limitation for raising service tax demand.
3. Validity of the service tax demand beyond the normal time limit under the second show cause notice.

Issue-wise Detailed Analysis:

1. Classification of the Service Provided by the Appellant:
The central issue in this case is whether the appellant's activity of providing helicopter services falls under "Supply of Tangible Goods Service" (STGS) under Section 65(105)(zzzzj) or "Transportation of Passengers by Air" under Section 65(105)(zzzo) of the Finance Act, 1994. The appellant contended that their services should be classified under "Transport of Passenger by Air Service" since they provided non-scheduled air transport services. However, the Department argued and the lower authorities concurred that the services fall under STGS because the helicopters were chartered out with the crew, and the effective control and possession remained with the appellant. The Tribunal upheld this view, referencing a similar case, Global Vectra Helicorp Ltd. vs. CC (Import) Mumbai, where it was determined that such services should be classified under STGS. The Tribunal emphasized that the appellant provided the entire helicopter on hire, not individual seats, and the control remained with the appellant, aligning with the characteristics of STGS.

2. Applicability of the Extended Period of Limitation:
The appellant challenged the invocation of the extended period of limitation under Section 73 for the service tax demand covering May 2008 to March 2010. The original authority justified the extended period, and the appellate authority upheld this view. The Tribunal agreed, noting that the extended period was rightfully invoked due to the nature of the case involving classification issues and the appellant's failure to pay the appropriate service tax under the correct category.

3. Validity of the Service Tax Demand Beyond the Normal Time Limit:
The second show cause notice dated 24.04.2012 covered the period April 2010 to March 2011. The Tribunal noted that the normal time limit for raising service tax demand was one year at the relevant time (up to 28.05.2012). Consequently, any demand falling beyond this one-year period under the second show cause notice was not sustainable and was set aside by the Tribunal.

Conclusion:
The Tribunal classified the appellant’s service under STGS and upheld the service tax demand on merit. However, it restricted the demand to one year for the show cause notice dated 24.04.2012, setting aside any demand beyond this period. The appeal was disposed of accordingly.