Fact: M/s. Dhillon Aviation Pvt. Ltd. (“the assessee”) was engaged in supplying the Aircraft/ helicopter belonging to/ owned by them along with its own crew to various entities for their use as per agreements entered into with the service receivers and thus was registered with the Service Tax department under category of “Supply of Tangible Goods Services” (SOTG). Revenue issued two demand-cum show cause notice alleging that the Service Tax was collected but not deposited in respect of the services rendered by the assessee. The said demands along with interest and penalties were confirmed by invoking extended period of limitation along with payment of service tax through CENVAT credit on inputs was not considered.
Applicant’s Interpretation of Law: The assessee claimed that the services provided by them originated and terminated in J&K and said services are not taxable under Section 64 of the Finance Act, 1994 and further it was contented that they collected service tax from customers and did not deposit the same due to the fact that they had paid service tax on inputs and they were of the impression in that case they need not pay service tax. Assessee stated that it paid entire Service Tax from CENVAT Credit for which they maintained RG-23 Register except on the value of services rendered in J&K which is exempt under Section 64 of Finance Act, 1994.
Held: The Hon’ble CESTAT in the case of “M/s. Dhillon Aviation Pvt. Ltd. vs. CCE-Delhi-II” rejected an assessment of demand for year 2013-14 applying Best Judgment Method, elucidates that, there is no reason that the department could not get the actual receipts details for said year, whereas holds receipts before May 16, 2008 as not taxable. Therefore, set aside the order and the demand for the period prior to October 23, 2008, as it was time barred. The amount of Rs. 29,41,62,101/- being service provided in the state of J&K was held exempt u/s 64 of the Finance Act. However, CESTAT upheld the penalty u/s 77, for non-filing or late filing of return. Hence, CESTAT also allowed the CENVAT credit on spare parts and input services to the assessee.
Citation: . [ TS-846-CESTAT-2018-ST ]