TRANSPORT OF CARGO BY AIR
CESTAT, CHENNAI
BENCH
Srilankan Airlines
Ltd.
v.
Commissioner of
Service Tax, Chennai
P.G. Chacko,
Judicial Member
And P.
Karthikeyan, Technical Member
Stay Order No. 827
of 2007
Application No.
S/PD/72 of 2007
Appeal No. S/107
of 2007
August 8, 2007
Section 65 of the Finance Act, 1994 - Transport of cargo by air -
Period from 15-3-2005 to 23-6-2005 - Assessee was providing services of
‘transport of cargo by air’ and received payment for said service in Indian
currency - Revenue demanded service tax from assessee - Notification No.
28/2005-ST dated 7-6-2005, amended rule 3(2) of Export of Service Rules, 2005
on 16-6-2005 by providing that payment for taxable service specified under rule
should be received by service provider in convertible foreign exchange -
Assessee after realizing fact that payments received by it in Indian currency
from recipients of above service were chargeable to service tax with effect
from 16-6-2005, started paying service tax from 24-6-2005 - Whether since there
was no payment of service tax by assessee from 16-6-2005 to 23-6-2005, assessee
was to be directed to pre-deposit service tax amount of Rs. 20 lakhs - Held,
yes [Paras 2 and 4]
Circulars & Notifications:
Notification No. 28/2004-ST dated 17-9-2004;
Notification No. 10/2005-ST dated 3-3-2005;
Notification No. 29/2005-ST dated 15-7-2005;
Notification No. 28/2005-ST dated 7-6-2005;
The assessee was providing the services of ‘transport of cargo by air’ and received payment for the said service in Indian currency. The revenue demanded service tax from the assessee and imposed the penalty.
On application :
The service of ‘transport of cargo by air’ was exempted from payment of service tax under Notification No. 28/2004-ST dated 17-9-2004 and this exemption was withdrawn under Notification No. 10/2005-ST dated 3-3-2005 with effect from 15-3-2005. This exemption was restored under Notification No. 29/2005-St, dated 15-7-2005. In between, the Export of Service Rules, 2005 came into force on 15-3-2005 under Notification No. 9/2005-ST, dated 3-3-2005. This Notification also exempted export of the above service from payment of service tax. Apparently, it was on the strength of this exemption that the assessee continued to render the above taxable service without payment of tax thereon. Notification No. 28/2005-ST dated 7-6-2005 amended sub-rule (2) of rule 3 of the above rules by providing that the payment for the taxable service specified under the rule should be received by the service-provider in convertible foreign exchange. The appellant were receiving payments for the above service in Indian currency throughout the entire period. The above amendment came into force on 16-6-2005. It appeared, the assessee after realizing the fact that the payments received by it in Indian currency from the recipients of the above service were chargeable to service tax with effect from 16-6-2005, started payment service tax from 24-6-2005. In the result, there was no payment of service tax by it from 15-3-2005 to 23-6-2005. The impugned demand was for this period. [Para 2]
Hence, the assessee was directed to pre-deposit an amount of Rs. 20,00,000. [Para 4]