Supply of Aircraft /Helicopter on Charter Hire Along With Own Crew Falls under “supply of tangible goods services”: CESTAT [Read Order]

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal(CESTAT) has held that the Supply of Aircraft /Helicopters on Charter Hire Along With Own Crew Falls under “supply of tangible goods services”.

M/s. Bharat Hotels Ltd, the appellants are engaged in supplying the Aircraft/Helicopter belonging to /owned by them to various entities for their use on mutually agreed terms and conditions with the service recipients.  While providing the said helicopter/ aircraft on charter hire, the appellants supplied its crew i.e. Pilot and other flying staff thereby keeping an effective control and possession of the said helicopter/ Aircraft with them. 

The department formed the opinion that the said services appeared to be covered under the taxable category of “supply of tangible goods services” taxable under service tax w.e.f. 16.05.2008.  The appellant however was not registered for supplying the said services. 

A show cause notice was served upon the appellants proposing the recovery of service tax amounting to Rs.1,41,04,760/- alongwith the amount of Education Cess, the proportionate interest and the appropriate penalties under sections 76, 77 and 78 of the Finance Act.  The appellants were also alleged to have deliberately indulged in concealing the facts from the Department with the sole intention of avoiding payment of service tax to the Government Exchequer. 

Mr. B.L. Narasimhan,  Counsel appeared for the appellant and Mr. Harshvardhan, Authorised Representative appeared for the Department.

In light of the EIH Ltd. decision, the appellant was liable to pay the service tax w.e.f.  16.05.2008 but the said demand has been raised vide the Show Cause Notice dated 18.06.2013 i.e. by invoking the extended period of limitation.  It is the case of the appellant that they were under the bonafide belief that the services rendered by them were “transportation of passengers by air service” which was not taxable before 01.07.2010.  It is also very much apparent that beyond this date the appellants are regularly discharging their service tax liability. 

A two-member bench of Dr Rachna Gupta, Member (Judicial) And Mr P V Subba Rao, Member (Technical) observe that the mere allegation will not be sufficient for the Department to invoke the extended period of limitation.  The Tribunal viewed that there is no element of suppression or malafide intention on the part of the appellant. 

The CESTAT held that “the services in question are “Supply of Tangible Goods Services”. However, Show Cause Notice is held as time-barred.  Entire demand gets hit by limitation.  Hence the order under challenge is hereby set aside.  Both the appeals are allowed with consequential benefits to the appellants.”

To Read the full text of the Order CLICK HERE

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