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TMI Blog2019 (1) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... a would fall under airport services - the said issue requires reconsideration by the adjudicating authority. Business Auxiliary Services - the commission received from CESSNA, USA for the activity carried out by the appellant in sales / marketing of aircrafts - export of services or not - Held that:- The Tribunal in the case of Commissioner of Service Tax Vs. Blue Star [2018 (9) TMI 1421 - BOMBAY HIGH COURT] has held that in cases of sales promotion on behalf of foreign principal, the benefit of services accrues outside India even if the activity is performed in India. For these reasons, the first limb of the requirement for export of service is satisfied. The second requirement is that the payment should be received in foreign exchange. In the present case, the appellant has adjusted the amount received by them in their accounts after deducting the expenses - thus, the activity tantamounts to export of service and therefore not liable to service tax. Business Auxiliary Services - goods supplied to Vikram Sarabhai Space Centre, Hindustan Aeronautics Ltd., Bharath Electronics Ltd. etc. - Held that:- The process undertaken by the appellant amounts to manufacture. For these reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax under the categories of Airport service, Commercial Coaching and Training, BAS and Renting of Immovable Property service. After due process of law, the original authority confirmed the demand of ₹ 3,17,04,720/- along with interest and imposed equal penalty besides penalty of ₹ 1.00 lakh under sections 76 and 77 of the Finance Act, 1994. Aggrieved, the appellants are before this forum. 2.1 On behalf of the appellant, ld. counsel Ms. Rinky appeared and argued the matter. She submitted that the show cause notice does not give the split up of the amounts with regard to the various activities carried out by appellants. Though it is shown that an amount of ₹ 1,77,95,415/- is demanded as service tax under airport services, the appellant has collected charges for parking of aircrafts, maintenance and repair of aircrafts, hangar charges etc. The appellant has not been able to defend the allegations properly for want of details of the amounts under each category of services. The show cause notice cannot sustain as it is devoid of grounds, reasons and particulars of the demand raised. 2.2 The appellant obtained aerodrome license from DGCA in the Private Use Catego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature. She placed reliance on the Board Circular B2/8/2004-TRU dated 10.9.2004 and Circular No.334/1/2010-TRU dated 26.2.2010 to argue that the amendment does not have retrospective application. The decision in the case of Commissioner of Service Tax, Mumbai I Vs. Soft Touch Aviation 2016 (43) STR 120 (Tri. Mum.) was also relied in this regard. 2.4 It is submitted by ld. counsel that the adjudicating authority has wrongly included the charges recovered by the appellant on chartering of aircrafts, renting of hangar, management, maintenance and repair of aircraft, cost of supply of spares etc. under the category of airport services. The charges for chartering of aircrafts is liable to service tax under the category of Supply of Tangible Goods Service introduced with effect from 16.5.2008. The Board vide instructions Dy. No. 20/Comm. (ST) 2009 dated 9.2.2009 has clarified this. Thus during the disputed period, the chartering of aircraft cannot be included under the category of airport services to make it subject to levy of service tax. The activity of renting hangar is in the nature of parking facility for aircrafts and would fall more specifically under Renting of Immovable Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al excise invoices were raised specifically mentioning that the goods are exempted from excise duty. Such specialized process of fabrication amounts to manufacture and the same cannot be held to be liable to service tax under the category of BAS. The adjudicating authority has rejected the plea of the appellant alleging that no evidence was produced by the appellant to support the submission that the process amounts to manufacture. When the appellant has raised central excise invoices to these Government undertakings showing the exemption of excise duty and also collection of labour charges, it is very much understood that the appellant was undertaking job work of specialized fabrication which amounts to manufacture. The demand of service tax on such charges under BAS is not maintainable. 2.6 Again, under BAS, amount received as commission from CESSNA Aircraft Co. USA, was also held to be taxable. The appellant acts as a sales representative for an aircraft company in USA and has received the commission on sale of aircrafts. Since the service is consumed outside India, the said activity would come under export of services and is not subject to levy of service tax. Further, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons would be favourable to the assessee and that such services are not taxable. She pleaded that the penalties in this regard may be set aside. 2.9 It is submitted by her that in the show cause notice, there is no allegation as to suppression of facts with intention to evade payment of service tax. Further, there is no finding by the Commissioner that the appellant has suppressed facts with intention to evade payment of service tax. The show cause notice itself did not have much clarity with regard to the different heads as well as the amount that would fall under the category of service for various activities. The penalties imposed under section 78 requires to be set aside as there is no suppression of facts on the part of the appellant. The counsel pointed out that the Commissioner has imposed penalty both under sections 76 and 78 which is erroneous in law. 3. The ld. AR Shri A. Cletus supported the findings in the impugned order. He submitted that the appellant is given license to run an airport. The definition of Airport Authority under section (3d) of Finance Act, 1994 provides that Airport Authority includes any person having the charge of management f an airport or a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le property services. The charges collected by appellant for various activities like charter of aircrafts, hangar charges, repair charges etc. have not been specifically mentioned. In other words, the split up details in each category is not available. Interestingly, there is no annexure to the show cause notice showing the quantification of demand. The appellant s counsel has submitted that the figures for quantification of demand have been taken by the department from the balance sheet as well as profit and loss account. The issue with regard to airport services has been argued by both sides referring to the definition of airport services as contained in Section 65(105)(zzm) of the Finance Act. The taxable service as per this section as it stood during the period 10.9.2004 is as under:- Taxable service means any service provided or to be provided to any person by airport authority or any person authorized by it, in an airport or civil enclave The said section was amended with effect from 1.7.2010 and reads as follows:- Taxable service means any services provided or to be provided to any person, by Airport authority or by any other person in any airport or civil enclav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l under airport services. For these reasons, we are of the opinion that the said issue requires reconsideration by the adjudicating authority. 5.5 The demand on BAS as per the submissions made includes the commission received from CESSNA, USA for the activity carried out by the appellant in sales / marketing of aircrafts. According to appellant these activities are to export of service. The authority below has rejected this plea holding that the services has accrued in India and also that the appellant has not received the payment in foreign exchange. It is seen that the appellant has acted as sales representative for sale of aircrafts by CESSNA, USA in India. Thus, it can be seen that the appellants were engaged in sales promotion and marketing of the aircrafts belonging to CESSNA, USA. The service recipient is situated outside India and the service is also received outside India. In the case of Commissioner of Service Tax Vs. ATE Enterprises 2018 (8) GSTL 123 (Bom.), the facts was that the appellant therein was procuring orders and passed on to overseas manufacturers, the transaction was for procuring orders and rendering of services if any and the rendering of such service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant has produced documents showing the details of these courses which help the students / candidates obtain employment after the course. The courses are in the nature of aviation science, maintenance and repair of aircraft etc. The said issue stands decided in the case of Institute of Aeronautics Engineering (supra). Following the said decision, we are of the opinion that the demand under this category cannot sustain and requires to be set aside, which we hereby do. 5.8 With respect to demand under the category of Renting of Immovable Property service, it is submitted by ld. counsel that appellant is confining the contest only on penalties imposed. The issue whether Renting of Immovable Property is subject to levy of service tax was contentious during the disputed period. There were litigations pending in various High Courts as well as in the Tribunal. Thereafter, the legislation was amended in 2010 with retrospective application to bring the activity within the contours of service tax. Being an interpretational issue, we are of the opinion that the penalty imposed in this regard is unjust and requires to be set aside, which we hereby do. It is also noted that the adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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