2024 (9) TMI 463 - AT - Service Tax

Monetary limit of appeals - Classification of services - business of in-flight catering services to various Airlines - Airport Service or not - period w.e.f. 1.7.2012 (negative list). Whether these appeals fall within the monetary limit of appeals to be filed by the Department before Tribunal? - HELD THAT - The amount involved in each appeal is less than Rs.50 lakhs. As per the litigation policy, these appeals fall within the monetary limits. The Ld. A.R has relied upon the decision in the case of CCE and Customs, CGST Jaipur-I Vs M/s.Century Metal Recycling Pvt. Ltd. 2024 (3) TMI 1245 - CESTAT NEW DELHI . The said decision has been rendered in a customs appeal. On perusal of the circular with regard to litigation policy, it is found that there are no intention on the part of Board to consider that the amount involved in all the appeals filed by the department has to be added together to ascertain the monetary limit. The number of appeals to be filed by a litigant is not a choice but on the basis of the procedure rules. If each appeal filed by department though falls within monetary limit is to be considered on merits by clubbing the amount involved in all the appeals against a particular respondent, it would result in chaos and injustice as there would be no uniformity. If the appeals which fall within the monetary limit and which are above the monetary limit are to be clubbed and taken together on merits only, it would be injustice to the respondent when compared to a single appeal filed by department on the same issue against another assessee in which amount involved is less than Rs.50 lakhs. To avoid such a situation, in our view, the litigation policy has to be given effect to - these four appeals fall within the monetary limit for appeals to be filed by Department before Tribunal. Classification of service - main contention put forward by Revenue is that the services are provided inside the airport and therefore would fall within the definition of Airport Services as under Section 65 (105) (zzm) of the Finance Act, 1944 - HELD THAT - There is nothing in the definition which says that the services provided in relation to airlines would also be covered in the definition. The definition says that the services provided by Airport Authority or a person authorized by it or any other person having charge of management or control of an airport are taxable under this category. In the present case, the respondent is not authorized by Airport. The original authority has correctly analyzed the definition and also the CBEC circular dt. 17.9.2004 to hold that respondent is not authorized for providing laundry service - the activity would not fall within the definition of Airport Services for the period prior to 1.7.2012. There is no merit in the appeals filed by the Department - The impugned orders are sustained - All appeals are dismissed.

Summary

Issues Involved:
1. Classification of laundry services under "Airport Services" for the period prior to 1.7.2012.
2. Applicability of monetary limits for filing appeals by the Department.

Issue-wise Detailed Analysis:

1. Classification of Laundry Services under "Airport Services" for the Period Prior to 1.7.2012:

The respondents are engaged in in-flight catering services and registered under 'Outdoor Catering Services' and 'Storage and Warehousing Services'. The Department issued show cause notices for not paying appropriate service tax on laundry services provided to airlines, proposing to demand short paid service tax under "Airport Service" as defined under Section 65 (105) (zzm) of the Finance Act, 1994. The original authority set aside the demand for the period prior to 1.7.2012 but confirmed it post-1.7.2012.

The Department argued that the respondent's activities of collecting, transporting, and delivering laundry items to and from the airport fall under "Airport Services". The permission given by the airport authority to enter the premises was considered an authorization to provide laundry services, thus attracting service tax.

The respondent countered that the definition of 'Airport Service' applies only to services rendered by the airport authority or a person authorized by it. The original authority correctly held that the respondent, not being authorized by the airport authority, cannot be said to provide "Airport Services". The Tribunal in Commissioner of Service Tax, Mumbai-I Vs Soft Touch Aviation observed that mere permission to enter airport premises does not equate to authorization to provide services.

The Tribunal upheld the original authority's decision, stating that the activity does not fall within the definition of "Airport Services" for the period prior to 1.7.2012. The decision in Soft Touch Aviation was deemed applicable, emphasizing that services provided directly to airlines, without airport authority authorization, do not qualify as "Airport Services".

2. Applicability of Monetary Limits for Filing Appeals by the Department:

The foremost issue was whether the appeals fall within the monetary limit for filing appeals by the Department before the Tribunal. The amount involved in each of the four appeals was less than Rs.50 lakhs. The Department argued that the total amount involved in all appeals combined (Rs.60 lakhs) should be considered, citing the decision in Commissioner of Central Excise and Customs, CGST Jaipur-I Vs M/s. Century Metal Recycling Pvt. Ltd.

The Tribunal clarified that the monetary limit should be decided based on the amount involved in each appeal, as per the litigation policy. The Circular F. No. 390/Misc/163/2010-JC, dated 26.12.2014, specifies that each appeal should be subjected to the threshold limit prescribed. The Tribunal found no intention in the Board's circular to consider the combined amount of different appeals to ascertain the monetary limit.

The Tribunal dismissed the four appeals (ST/40700 to 40703/2017) on monetary limits, stating that clubbing amounts of different appeals would result in chaos and injustice. The decision in Century Metal Recycling was deemed inapplicable as it pertained to customs law and probable fraud in imports, which was not relevant in this case.

For the appeal ST/40699/2017, involving an amount above Rs.60 lakhs, the Tribunal considered the merits. It reiterated that the services provided by the respondent were not authorized by the airport authority and thus did not fall under "Airport Services" as defined prior to 1.7.2012. The reliance on Western Agencies was found misplaced as the issues and definitions were distinguishable.

Conclusion:

The Tribunal sustained the impugned orders and dismissed all appeals. The appeals ST/40700 to 40703/2017 were dismissed on monetary limits, while appeal ST/40699/2017 was dismissed on merits. The Tribunal upheld that the respondent's activities did not fall under "Airport Services" for the period prior to 1.7.2012, and the monetary limits for filing appeals should be applied individually to each appeal.