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EIH Limited Vs. C.C.E., Delhi-I - (Customs, Excise and Service Tax Appellate Tribunal) (14 Sep 2018)

For invoking extended period of limitation, there should be an intention to evade duty


Service Tax

The Appellants are having a unit of Maidens Hotels for providing Renting of Immovable Property Services, Mandap Keeper Service, Dry Cleaning Services, Business Auxiliary Services & internet cafe services and they have been accordingly registered. They have also got registered for providing Aircraft operator Services. However, Department in furtherance of an investigation on an intelligence gathered, noticed that Appellants were supplying the Aircraft/Helicopter service to different service receivers as per the agreement entered into and as such, it was alleged that they were providing services under the category of supply of tangible goods, for which they neither took any Service Tax Registration nor did they paid any service tax on the said activity. Resultantly, show cause notice was served upon them demanding Service Tax under the category of supply of tangible goods for the relevant period, alongwith the interest and the proportionate penalties. The said show cause notice was adjudicated thereby confirming the said demand. Being aggrieved thereof, an appeal was filed before the Commissioner (Appeals) who has upheld the said order and rejected the appeal.

The moot question to be considered is as to whether in the given facts and circumstances of the case, the services provided by the appellant are the Aircraft Operator Service as assumed by the appellant or, are the services for supply of tangible goods for use as alleged by the Department.

For an "Aircraft operator service", the activity is regulated under strict observation of Aviation Industry subject to stringent regulatory controls, Director General of Civil Aviation grants permits to the scheduled aircraft transport service. Even a non-scheduled permit can be granted by DGCA and the fact remains is that any person in Aviation has at least to be a non-scheduled operator. As far as supply of tangible goods is concerned, it is apparent that it is the transfer of the goods to be used without the transfer of its legal possession and effective control by one person to another. As per the invoice, the Aircraft was given on hire for use of charterer on the terms and conditions of the permit in favour of the Appellant. It is evident that, the Aircraft was supplied alongwith the licensed/trained Pilot and necessary Engineering Crew to operate the Aircraft. Thus, the effective control and possession of the Aircraft was still with the Appellant, who was charging the charterer on the basis of actual time consumed during the said flight.

An identical issue regarding charter hire of helicopter came up before the Tribunal in the case of Global Vectra Helicorp Ltd. v. CC (Import) Mumbai, in that case the Appellant therein claimed the classification of their service as Transportation of Passengers by Air Service. But, the Tribunal after very detailed discussion of the facts and various case laws on the subject as well as CBEC Circular No. 20/2009 dated 9th February, 2009 came to the conclusion that, the services will be rightly classifiable under the category of "Supply to Tangible Goods Service". By following the decision of the Tribunal, classification of the service under the category of STGS ordered. Consequently, confirmation of demand of service tax on merit upheld.

The law for invoking extended period of limitation is stated that, the onus heavily rest upon the Department to prove the alleged suppression of facts. Perusal of entire record shows no such discharge on part of the Department, except merely raising the oral allegation of suppression. The Hon'ble Supreme Court in the case of Gopal Zarda Udyog v. CCE, Delhi, has held that extended period is applicable only when something positive other than mere inaction or failure on part of the Assessee is proved conscious and deliberate with holding of information by the assessee is necessary for invoking the extended period. It was clarified by the Hon'ble Apex Court that, if it comes to the knowledge of Department that Assessee had reasonable belief that, he is not required to give particular information only normal period of limitation i.e. one year is applicable.

In an earlier decision also in Cosmic Dye Chemical v. CCE, Bombay, it was clarified that for invoking extended period of limitation, there should be an intention to evade duty. The alleged suppression must be wilful and it is for the Department to prove the same. The Department has failed to prove the wilful intention. The Department was not entitled to invoke the extended period of limitation. Accordingly, the demand falling beyond one year period preceding show cause notice is not sustainable and accordingly is set aside. The order under challenge is modified in the above discussed terms confining the demand for a period of one year only. Appeal disposed off.

Relevant : Gopal Zarda Udyog v. CCE, Delhi - MANU/SC/0809/2005, Cosmic Dye Chemical v. CCE, Bombay - MANU/SC/0791/1995


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