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TMI Blog2022 (1) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... n placed by learned counsel for the appellant, would not come to the aid for the appellant as it is only where a service is capable of differential treatment for any purpose based on its description that the most specific description shall be preferred over a more general description. In any view of the matter, the most specific description of the service rendered by the appellant is STG. The services rendered by the appellant in charter hire of helicopters to various corporates for offshore operations is classifiable under supply of tangible goods for use service - the demand of service tax under the said category along with interest thereon is upheld. However, wherever the appellant has not collected service tax separately from the customers, the consideration received shall be treated as cum-tax and the service tax demand ought to be recomputed - the imposition of penalties on the appellant under Sections 76 77 of the Finance Act, 1994 for the default in payment of service tax and for non-compliance of statutory provisions relating to the service tax is upheld - the penalties imposed under Section 78 of the Finance Act, 1994 is set aside. Appeal allowed in part. X X X X Extracts X X X X X X X X Extracts X X X X ..... y air" and "commercial training and coaching". 6. The issue involved in these appeals is as to whether the services provided by the appellant would be taxable under the head "transportation of passengers by air" [TPA] which became taxable w.e.f. 01.07.2010 or would be taxable under "supply of tangible goods" [STG] w.e.f 16.05.2008. 7. In order to appreciate the contentions that have been advanced by the learned counsel for the appellant and the learned authorised representatives appearing for the Department, it would be necessary to examine the taxable services provided under the head "TPA‟ as contended by the appellant and "STG‟ as contended by the Department. 8. Prior to 01.07.2010, "TPA‟ was a taxable service defined in section 65(105)(zzzo) of the Finance Act in relation to transport of a passenger embarking in India for international journey. It is reproduced below: "Section 65(105)(zzzo) "taxable service" means any service provided or to be provided to any passenger, by an aircraft operator, in relation to scheduled or non-scheduled air transport of such passenger embarking in India for international journey, in any class other than economy class. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as subjected to levy of service tax for domestic travel also w.e.f. 01.07.2010. 15. The order passed by the Commissioner (Appeals) notices the following facts: (i) "In order to ascertain the veracity of the contents of the appellant, I have carefully gone through the impugned order and find that in para E7.4 at page 56, the original authority has observed as under: "I note that the notice claimed to have paid service tax of ₹ 28,83,093 for the period 2009-10 to 2013-14 under Air Transport of Passenger Services (year wise service tax amount can be tabulated as per table below): Financial Year Service tax paid under Air Transport of Passenger Services as claimed in their submissions 2008-09 Nil 2009-10 3,89,809 2010-11 4,73,089 2011-12 6,41,658 2012-13 8,43,505 2013-14 5,35,032 Total 28,83,093 From the above it can be seen that the appellant has been discharging their Service Tax liability since 2009-10 onwards. So far as the year 2008-09 is concerned, the impugned order clearly says that no Service Tax is payable by the appellant as the receipt of taxable services falls within the exemption limit of ₹ 10 lakh. It is also on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (upto 30.06.2012) taxable services were defined separately under clause (105) of Section 65 of the Finance Act, 1994 and the principles of classification were mentioned in Section 65A which stated that the real nature and the substance of the transaction and not merely the form of transaction should be the guiding factor for deciding the classification and therefore the said services are taxable and are appropriately classifiable under Section 65(105) (zzzzj) of Finance Act, 1994. Even after the introduction of negative regime, by virtue of the facts of the case, the conditions of the agreement (as opined in the impugned order), details given in the invoices and also the fact that the right of possession and effective control of the aircraft is not transferred to the charterer, the question of classifying the said services under 'Air Transport Service does not arise. Hence, no intervention is warranted in the impugned order." (iv) "Now I come to the question of charging of interest under Section 75 of the Finance Act, 1994 and imposition of penalties under Section 76, 77 and 78 of the Finance Act, 1994. The fact of the case with regard to payment of Service Tax on the part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cases relied upon the Appellants, there is a certain element of technical or venial breach of a provision of law on the part of the concerned party which in turn has served as a pointer of bona-fide default on the part of that party, but in the instant case, the intentional mis-classification of the services rendered cannot be termed as a technical or venial breach of any provision on their part. As discussed above, the Appellants have also failed in proving their bona-fide in as much as the fact that they knew the exact classification of the services rendered by them and still failed to discharge their tax liability under the proper classification. It is not a case where there was any confusion with regard to the correct classification of service, rather they have deliberately defied the correct payment of Service Tax. In view of foregoing, when the offence of deliberately mis-classifying their services on the part of the Appellants is proved beyond doubt, the said act deserves to be penalized and accordingly, the observation with regard to imposition of penalty under Section 77(1)(a) and Section 77(2) of the Finance Act, 1994 made in the impugned order is vindicated." (emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law laid down by the Bombay High Court in Indian National Shipowners‟ Association vs. Union of India [2009 (14) S.T.R. 289 (Bom.)] pronounced on 23.03.2009. However, the Tribunal failed to appreciate the observations made by the Bombay High Court in paragraph 40 of the judgment in Indian National Shipowners‟ Association; and (iii) The Commissioner (Appeals) completely failed to appreciate the contentions advanced on behalf of the appellant and, therefore, passed the order in a mechanical manner. 18. Shri Rakesh Kumar and Dr. Radhe Tallo, learned authorised representatives appearing for the Department, have however, supported the impugned order and made the following submissions: (i) The appellant was supplying aircraft/helicopter owned by it to various entities for their use. The services were rendered by the appellant to the service recipient on mutually agreed terms and conditions and while providing the helicopter/aircraft on the charter, the appellant supplied its own crew keeping an effective control and possession of the helicopter/ aircraft; and (ii) The services so provided by the appellant are clearly covered under the taxable category of the STG w.e.f. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be useful to refer to the Circular dated 09.02.2009 issued by the Board to clarify the situation. It is as follows: "It has been brought to the notice of the Board that many non-scheduled operator engaged in the business of giving the right to use the aircraft to its customers (Chartering of Aircrafts) are not paying service tax. The issue has been examined in the Board. With effect from 16-5-2008, service provided to any person by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances is taxable service under section 65(105)(zzzj). Chartering of aircrafts by a client only confers him with the right to use the aircraft and the owner of the aircraft in such case does not transfer right of possession. As to whether effective control over the aircraft is transferred or not would be a question of fact to be determined in each case. Where the crew is also provided by the owners of the aircrafts and in a wet lease of aircraft effective control is not transferred." 25. Learned counsel for the appellant also contende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, referred to a third Member, who gave his opinion on the basis of which the following Final Order was passed. "FINAL ORDER 23. In the light of the majority decision, we pass the following orders : (i) We hold that the services rendered by the appellant in charter hire of helicopters to various corporates for offshore operations is classifiable under "supply of tangible goods for use" service. Consequently, we uphold the demand of service tax under the said category along with interest thereon. However, wherever the appellant has not collected service tax separately from the customers, the consideration received shall be treated as cum-tax and the service tax demand ought to be recomputed. The claim of the appellant for payment of ₹ 10,31,53,803/- towards service tax dues shall be verified and if found correct, the same shall be deducted from the amount due from the appellant. We also uphold the denial of Cenvat credit taken of ₹ 2,33,09,951/-. The appellant shall forthwith reverse the said credit, if not already done. The appellant shall also be liable to pay interest on the credit wrongly availed from the date of taking the credit to the date of reversal in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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