2019 (1) TMI 1307 – CESTAT CHENNAI – TMI – Non-payment of service tax – airport services – renting of immovable property service – BAS – Commercial Coaching and Training services – demand of service tax – Held that:- The demand is made under four categories of services namely Airport services, Commercial Coaching and Training services, BAS and renting of immovable 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.
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Airport services – Held that:- Without properly mentioning the different charges which fell under this category of airport service and also without verifying whether the same amount has spill over into other category of services, it would be unfair and improper to demand serv
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service and therefore not liable to service tax.
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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 reasons, the demand of service tax under BAS for the job work done by the appellant cannot sustain and requires to be set aside – demand set aside.
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Commercial Coaching and Training Services – Held that:- The appellant 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 [2017 (12) TMI 1378 – CESTAT NEW DELHI]. Following the said decision, we are of the opinion that the demand under this category cannot sustain and requires to be set aside.
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Penalty –
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peal is partly allowed and partly remanded. – Appeal No. ST/192/2012 – Final Order No. 40008/2019 – Dated:- 4-1-2019 – Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Ms. Rinky. N, Advocate for the Appellant Shri A. Cletus, Addl. Commissioner (AR) for the Respondent ORDER Per Bench Brief facts are that based on intelligence gathered, the officers of Central Excise conducted investigation and noticed that though the appellants provided airport services, renting of immovable property service, BAS etc. they were not discharging service tax on such services. Show cause notice was issued proposing to demand service 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 Fi
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ce and repair of aircraft etc. They had obtained service tax registration under BAS as well as Management, Maintenance and Repair services etc. The demand has been quantified on the basis of figures collected from the balance sheet and profit and loss account of the appellant for the period from 2005 – 06 to 2008 – 09 and on the basis of invoice for the period from 2009 – 10, which is as under:- S. No. Nature of Service Amount (Rs.) 1. Airport Service 1,77,95,415/- 2. Business Auxiliary Service 1,12,28,111/- 3. Renting of immovable property service 62,46,950/- 4. Commercial Coaching and Training Service 10,09,843/- Total 3,62,80,319/- Further, the tax of ₹ 45,75,599/- had been paid by the appellant before detection of the case and therefore the net demand raised was of ₹ 3,17,04,720/- and the amount of ₹ 1,42,32,460/- paid during the investigation was appropriated. Further, penalties were proposed to be imposed under sections 76, 77 and78 of Finance Act, 1994. The app
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34/1/2010-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 na
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the said services is in the nature of trading activity, the demand could not be confirmed on the ground that the cost of spare is included in the value of the services because at first there was no allegation to this effect in the show cause notice and in any case the issue is settled that the value of items supplied or sold in course of providing repair and maintenance service are not includible in the taxable value. She relied upon the decision in Tanya Automobiles P. Ltd. Vs. Commissioner of Central Excise – 2016 (43) STR 155 (Tri. All.). Further, in any case, the demand having been proposed under airport services, the same cannot be confirmed under the category of BAS. She therefore argued that the demand under the category of airport services is liable to be set aside. 2.5 In regard to the demand of ₹ 1,12,28,111/-, under the category of BAS, the ld. counsel submitted that there is no details given in the show cause notice as to which of the activities carried out by the ap
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ernment 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 amount has been received in foreign convertible currency. The adjudicating authority has confirmed the demand holding that the service is accrued in India and that there is no proof that the appellant has received the amount in foreign currency. In fact, the show cause notice does not make any such allega
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ld of aviation science and also in maintenance and repair of aircrafts. The trainees seek employment after such course and therefore these are purely vocational training courses and is exempted under Notification No. 24/2004 dated 10.9.2004. She relied upon the decision in the case of Institute of Aeronautics & Engineering Vs. Commissioner of Central Excise, Bhopal – 2018 (10) GSTL 267 (Tri. Del.). 2.8 In regard to the demand on Renting of Immovable Property Service, the ld. counsel for appellant submitted that appellant is contesting only the penalty imposed. The issue with regard to Renting of Immovable Property service was highly contentious during the relevant period. In Home Solutions Retail India Ltd. – 2009 (14) STR 433 (Del.), the Hon ble Delhi High Court had initially held that the said services are not taxable which was appealed before the Supreme Court. There were litigations pending in various courts. An amendment was later introduced in 2010 making it taxable retrospec
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ted 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 civil enclave. The appellants have charge and control of the airport and therefore their activities would fall under Airport Services . The definition of airport services as it stood during the relevant period includes activities such as management of airport, service provided to airlines as well as for cargo and passenger airlines, transit facilities, warehousing charges etc. The contention of the appellant that the parking charges, hangar chargers would not fall within airport service is therefore incorrect. The activities carried out by appellant at the airport has been rightly classified under airport services and the demand under this head is legal and proper. The appellant has not discharged service
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d fall under Supply of Tangible Goods services and would be taxable only from 16.5.2008, he argued that chartering of aircrafts would fall under airport services. The appellant has been authorized or given license to operate the airport and therefore all activity rendered by them in the airport would fall under the category of airport services. He therefore prayed that the impugned order does not does call for any interference. 4. Heard both sides. 5.1 At the foremost, we have to say that on perusal of the show cause notice, the demand is made under four categories of services namely Airport services, Commercial Coaching and Training services, BAS and renting of immovable 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
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enclave 5.3 The ld. counsel has argued that the appellant not being authorized by airport authority, the activities would not fall within the definition of airport services. On perusal of the definition of airport authority, it reads as under:- Section 64 (3d) Airports Authority means the Airports Authority of India constituted under section 3 of the Airports Authority of India Act, 1994 (55 of 1994) and also includes any person having the charge of management of an airport or a civil enclave 5.4 Any services provided or to be provided to any person by airport authority or any person authorized by it would fall under the said category. The license issued to the appellant authorizes the appellant to operate and manage the airport. So the services of the appellant within the airport, falls within the definition of airport service. However, it is seen that the appellant has been collecting charges for different activities carried out in the airport. They collect charges for aircraft char
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rport service and also without verifying whether the same amount has spill over into other category of services, it would be unfair and improper to demand service tax alleging that every services which is provided within the airport area would fall 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 marketi
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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. The very same issue was analyzed by the Tribunal in the case of Arafath Travels Vs. Commissioner of Service Tax, Chennai as reported in 2017 (7) GSTL 437 (Tri. Chennai). In any case, the demand prior to 18.4.2006 cannot sustain as per the decision of the Hon ble Supreme Court in the case of Indian National Shipowners Association. From the facts and following the decisions cited, we are of the view that the activity tantamounts to export of service and therefore not liable to service tax. 5.6 The second category of demand under BAS is with regard to goods supplied to Vikram Sarabhai Space Centre, Hindustan Aeronautics Ltd., Bharath Electronics Ltd. etc. The show cause notice has alleged that the activity of fabrication undertaken by the appellant does amounts to manufa
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e 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
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