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TMI Blog2015 (11) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... nger is travelling by airline, he is entitled to carry baggage upto 15 kg/20 kgs free of cost. On their travelling charges on their air ticket they are paying service tax as per applicable rates. If any passenger carrying baggage over and above 15/20 kg, the airlines charges excess baggage charges. Revenue is of the view that excess baggage charge is taxable under the category of transport of goods by air therefore the appellants are liable to pay service tax on the amount collected as excess baggage charges. In these circumstances, the proceedings were initiated against both the appellants and demands of service tax have been confirmed by invoking the extended period of limitation alongwith interest and various penalties have been imposed. Aggrieved by the said orders, the appellants are before us. 4. Heard the parties. 5. The learned counsels for both the appellants have advanced arguments and are almost common. Therefore the arguments are recorded commonly. 6. It is contended on behalf of the appellants that the excess baggage charges collected by the appellants are not towards any separate service but is an integral part of the service of transportation of passenger by air. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally, it is argued that the extended period of limitation is not invocable in the facts and circumstances of the case. 7. The Central Board of Excise & Customs Circular No. 104/7/2008-ST dated 6.8.2008 is also relied upon by the appellant. 8. The appellants also relied upon the decision of the Tribunal in the case of Hira Industries ltd vs CCE, Raipur reported in 2012(28) STR 23 (Tri-Del) and in M. Ramakrishna Reddy vs. CCE & C, Tirupathi reported in 2009 (13) STR 661 (Tr-Bang) and Notification NO. 26/2010-ST dated 22.6.2010. 9. On the other hand, the learned A.R. strongly opposed the contentions and submitted that in this case the excess baggage charges is only for the service of transportation of goods by air. In fact these charges are charged from the passenger for transportation of goods by air and for free baggage upto 15/20 kgs the charges are included in the cost of the tickets and that is separately charged from the passengers. In these circumstances the excess baggage charges are required to be taxed under the category of transportation of goods by air. Therefore, the appeals are required to be dismissed. For the extended period, it is contended that the appellants are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that the excess baggage charges are nothing but an integral part of the service of transport of passenger by air. 14. We have also seen that the appellant is paying service tax under the category of transportation of passengers by air which are fixed per passenger during the impugned periods. Therefore, the appellants are not required to pay any service tax on excess baggage charges during the impugned period as the excess baggage charges is an integral part of the main service provided by the appellants, namely transportation of passenger by air. 15. We have also seen that the issue in question is debatable issue for classification of the service on the basis of various judicial pronouncements. In these circumstances, the extended period of limitation is not invocable. Therefore, the appeals succeed on merits as well as on limitation. 16. Accordingly, the impugned orders are set aside and the appeals are allowed, with consequential reliefs, if any. (Pronounced in Court on __.10.2014) Per P S Pruthi 17. I have gone through the order recorded by Ld. brother. However, as I hold a different view in the matter, I am recording my order separately. 18. The facts of the case hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd restaurant service. In such cases, service tax is leviable on the two services. But when free breakfast is part of room rent, only then it may be said that the breakfast service is incidental to room rent service. Therefore the service of excess baggage transportation cannot be considered as an integral part of the services of transportation of passenger, when both the services are distinctly leviable to tax under Service Tax law. 19.1 During part of the period in dispute, Service Tax was leviable on transport of passenger by Air under composite scheme. For example, under Notification NO. 26/2010-ST dated 22.06.2010, the Service Tax was exempted from so much of Service Tax as is in excess of 10% of the gross value of the ticket or Rs. 100/- per journey whichever is less, for passenger transporting in any class within India. Respectfully, I disagree with my Ld. brother who has viewed that because the appellants are paying Service Tax which is fixed per passenger, therefore the appellants are not required to pay tax on excess baggage. As I discussed above, the situation does not warrant to consider the excess baggage service as an integral part of the passenger services when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout transportation of passenger. The two activities are separately identifiable. In the cases cited by the appellants, the activities of loading and transportation were taken under a composite contract and paid for accordingly. However in the present case there is no composite transaction and transportation of passengers and baggage are paid for, separately. 19.3 The appellants have relied upon Section 65A of the Finance Act, 1994, to contend that, under Section 65(2)(a), the sub-clause which provides the most specific description shall be preferred. And under sub-clause (b) composite services shall be classified as if they consisted of a service which gives them for their essential character. In my view, the service of transportation of goods by Air specifically covers the carriage of excess baggage. Therefore there is no need to refer to clause (b) which speaks of composite services. In any case, if the service cannot be classified as per clause (a) or clause (b), then according to clause (c), it shall be classified under the sub-clause which it occurs first. In the present case the sub-clause (zzn) occurs before the sub-clause (zzzo) which refers to passenger transportation. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to pay Service Tax cannot be condoned. 21. There are innumerable judgments holding that penalty may be imposed for failure to pay Service Tax, under Section 76 of the Finance Act, 1994. Section 76 provides a statutory binding to impose penalty. It states that penalty shall be paid for non-payment of tax. 21.1 The appellants failed to take registration in respect of their activity of transportation of excess baggage under Section 69 of the Finance Act, 1994 read with Rule 4 of the Service Tax Rules, 1994. They also did not file appropriate half yearly Service Tax returns under Section 70 read with Rule 7 ibid. These are mandatory requirements and the appellants are not new to Service Tax law. They are big organizations who have ignored the requirement of the law specially keeping in view the fact that they were charging the passengers for the excess baggage. Therefore, they are liable to penalty under Section 77 of the Finance Act, 1994. 21.2 The appellants are paying service tax on passenger transportation and cargo transportation. Therefore, they cannot plead ignorance for not paying service tax on charges for excess baggage. They are well aware of Service Tax Law. But they c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r No. M/2026/14/CSTB/C-I Dtd: 18/9/14 / 2/12/14 Third Member's Decision Appeal No. ST/865-866/12, ST/86071 & 86819/14 M/s. Kingfisher Airlines Ltd. , M/s Jet Airways Ltd. Versus Commissioner of Service Tax, Mumbai -I Date of hearing : 23.04.2015 Date of decision: 16.09.2015 Per Anil Choudhary I have heard the parties at length and also gone through the orders recorded by my brothers learned Member (Judicial) and learned Member (Technical). I find that the learned Member (Judicial) has held that excess baggage charges cannot be collected in isolation, without there being transportation of passengers by Air. Thus, the main service is 'transport of passengers by Air'. Thus, the main service is 'transport of passengers by Air' and 'transport of the goods of the passenger' is an incidental activity. Further view taken is that as per the provisions of Section 65A(2)(a) & (b), the nature of service which gives to the service its essential character or which provides the most descriptive description shall be a criteria for classification. 2. On the other hand, the learned Member (Technical) has held that as the charges are collected separately - for the service of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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