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TMI Blog2014 (7) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... at at the time of rendering the services consideration thereon was received. So we are not in prima facie, agreement with the argument that IAL had not received payment for services rendered. Considering the fact that the appellant is a national carrier under the ownership of Government of India presently facing serious financial difficulties and in view of the overall appreciation of the issues involved as analyzed above - unconditional stay granted. - ST/187/2010-(DB) - Stay Order No. ST/S/1096/2012-Cus.(PB) - Dated:- 12-10-2012 - Ms. Archana Wadhwa, Member (J) and Shri Mathew John, Member (T) Shri P.K. Sahu and P. Shukla, Advocates, for the Appellant. Shri Amrish Jain, DR, for the Respondent. ORDER The appellant company has been constituted in the year 2007 by merging Air India Ltd. (AIL) and Indian Airlines Ltd. (IAL). The present appeal before this Tribunal is in the matter of service tax demanded from Indian Airlines Ltd. (IAL) for the period July, 2003 to March, 2007. During that period IAL had a 100% subsidiary by name Airline Allied Services Ltd. (AASL). The dispute is in the matter of activities carried out by IAL to enable AASL to provide servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Board of Directors and the senior management of AASL includes senior executives of IAL. Two years of operations by AASL have witnessed a high level of cooperation between the two carriers. It was however felt that there is a need to formalize this relationship between the two organizations through the admission of a Memorandum of Understanding (MoU), which would also allow greater clarity with respect to the roles and responsibilities of the two organizations. This MOU is entered into between the IAL and AASL to bring about overall improvement in the production, productivity and viability of the company with mission to achieve high aircraft utilization, maximize contribution and ensure efficient manpower and resource utilization of the two parties. This MOU would serve as the platform for ascertaining the obligations of both the service provider (IAL) and the service receiver (AASL). 3. From the three agreements it can be seen that though AASL was a company distinct from IAL, the affairs of AASL were being substantially managed using the resources of IAL as per the three agreements and substantially controlled by IAL even in day-to-day operations. The main objective as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of U.P. v. Renusagar Power Co. - AIR 1988 SC 1737 in support of the argument. 5.2 It is contested that IAL was not able to recover all the expenses incurred by them for operating AASL and the monies due from AASL was written off and consequently there can not be any liability, if at all the activities are considered as services by IAL to AASL because service tax is payable only when consideration is received for services rendered. 5.3 The contract between the two was for rendering the whole range of activities of AASL and certain components of the activities cannot be vivisected and classified as business auxiliary services and tax demanded. 5.4 The appellant submit that the Show Cause Notice dated 24-10-2008 for the period July, 2003 to March, 2007 is time barred because it is issued beyond a period of one year. It is pleaded that the activities of the appellant in the matter was in the public domain and also published in the balance sheets of the appellant, department was fully aware of the activities of the appellant and hence extended period beyond one year cannot be invoked for issue of demand in such cases. 5.5 The appellant also submits that the appellant is pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case for demanding service tax due but not paid. 6.3 He also invites our attention to Para 1 and 4 of the Ground Traffic, other Support Services and Handling Agreement between IAL and AASL to point out the nature of the services rendered and the arrangement for realizing consideration for such services. The said clause of the agreement is reproduced below : Agreement on Traffic, Ground Handling, Other Supports 1. Sales, Marketing and Reservation 1.1 It is mutually agreed that IAL will provide AASL with Sales and Marketing Support through its offices located in India and abroad and all Agents/GSAs of IAL will handle AASL business in this regard on the same terms and conditions existing or determined in future by IAL for AASL. 1.2 IAL will collect on behalf of AASL for traffic documents all revenue of passenger tickets and booking of freight, excess baggage, and mail directly or through its Agents or on other airline documents honoured on AASL flights and will pay the applicable commissions incentives interline service charges. The commission/ incentives interline service charges so paid to the agents/ other airlines shall be debited to AASL by IAL. 1.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He submits that some of the other Airlines also are defaulting in payment of taxes. A rule that if any company is running in losses such company need not pay indirect taxes payable cannot be accepted and such an argument can have disastrous consequences to Revenue because there are far too many companies which show losses in their books of accounts. 7. We have considered arguments on both sides. We find that the main argument of the appellant is that IAL and AASL were the same and the corporate veil of the two entities should be lifted and both should be considered to be the same. 8. Now there is a need to examine the main decision relied upon by the appellant which is the decision of the Apex Court in State of UP and Others v. Renusagar Power Company and others (AIR 1988 S.C. 1737). Here the facts were that M/s HINDALCO had set up a power plant through a 100% subsidiary namely Renusagar Power Co., a power plant which started producing power and supplying power to HINDALCO in 1967. Under the Electricity Duty Act, 1952 of the State of UP, electricity duty was payable on electricity other than from own source of generation . UP State demanded such duty from Renusagar Power Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisprudence. The ghost of Salomon s case still visits frequently the hounds of Company Law but the veil has been pierced in many cases. Some of these have been noted by Justice P.B. Mukharji in the New Jurisprudence. (Tagore Law Lecture 183). 67. It appears to us, however, that as mentioned the concept of lifting the corporate veil is a changing concept and is of expanding horizons. We think that the appellant was in error in not treating Renusagar s power plant as the power plant of Hindalco and not treating it as the own source of energy. The respondent is liable to duty on the same and on that footing alone; this is evident in view of the principles enunciated and the doctrine now established by way of decision of this Court in Life Insurance Corpn. of India, (supra) that in the facts of this case Sections 3(l)(c) and 4(1)(c) of the Act are to be interpreted accordingly. The person generating and consuming energy were the same and the corporate veil should be lifted. In the facts of this case Hindalco and Renusagar were inextricably linked up together. Renusagar had in reality no separate and independent existence apart from and independent of Hindalco. 68. In the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the work sheets based on which tax demand is confirmed it is seen that during July 2003 there was opening dues from AASL to IAL amounting to ₹ 134.53 crores. By Mar 2007 this amount increased to ₹ 306.75 crores. This is the reason why the appellant is contesting that they have not realised the monies due from AASL. The position can be illustrated from the work sheet for the year 2006-07 summarised below : S. No. Description of the amounts in columns (3), (4) and (5) Payments (debits) (Rs.) Receipts (credits) (Rs.) Balance (Rs.) (1) (2) (3) (4) (5) 1 Opening balance that is dues from IAL to AASL for the year 2006-07 -2028585332 2 Revenue Received in the hands of IAL from operations of AASL 3650290340 3 Actual paid to AASL 3348500000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of rendering the services consideration thereon was received. So we are not in prima facie, agreement with the argument that IAL had not received payment for services rendered. 15. In the matter of vivisection of contracts also the matter is being contested in different higher courts. But the Tribunal has taken the view in many cases that where a contract provides for different services with separate charges specified for each service such services can be vivisected and service tax levied thereon. 16. We are prima facie not in agreement with the contention of the appellant that if a matter is in the public domain through balance sheet of the company and hence suppression of information cannot be alleged. We note the decision of the Apex Court in the case of Usha Rectifier Corpn. (I) Ltd. v. CCE - 2011 (263) E.L.T. 655 (S.C.) in this matter. 17. Considering the fact that the appellant is a national carrier under the ownership of Government of India presently facing serious financial difficulties and in view of the overall appreciation of the issues involved as analyzed above we consider it proper to waive the requirement of pre-deposit of dues arising from the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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