Charter Hire of Helicopters to various Corporates for Offshore Operations classifiable under ‘Supply of Tangible Goods for use: CESTAT upholds Penalty against Chimes Aviation [Read Order]

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) while upholding penalty against Chimes Aviation held that Charter hired helicopters to various corporates for offshore operations classifiable under “supply of tangible goods for use.

The appellant, Chimes Aviation P Ltd. is in the business of imparting training and coaching to individuals in the field of flying aircrafts for obtaining commercial licences and private licences from the Director General of Civil Aviation. The appellant, after receiving the requisite permission, also started operating the aircraft on a need basis or charter service and obtained registration as a service provider of the taxable services “transportation of passengers by air” and “commercial training and coaching”.

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” 5 which became taxable w.e.f. 01.07.2010 or would be taxable under “supply of tangible goods”6 w.e.f 16.05.2008.

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.

The coram headed by the President Justice Dilip Gupta and Technical Member, P.Anjani Kumar held that the appellant had not taken registration under STG taxable service and the appellant had also contravened the provisions of Chapter V of the Finance Act and the Rules made there under. Detail findings on this issue have been recorded by the Commissioner (Appeals) in the impugned order and the same have been recorded in paragraph 15(v) of the order. As there is no error in the findings recorded by the Commissioner (Appeals), the imposition of penalties under section 77(1)(a) and section 77(2) of the Finance Act cannot be faulted.

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