By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Import of Service – Sec. 66A – Services of repair and overhaul of aircraft performed wholly abroad – Held not taxable – commission paid to GSA’s abroad in relation to business in India– Held taxable.
Whether service tax applicable u/s. 66A on services of repair and overhaul of aircrafts and in respect of commission paid to GSA’s abroad?
Facts:
The Appellant, a wholly Government of India Company, engaged in the business of transportation of passengers and goods by air appointed “General Sales Agents” (GSA) who represented them and handled their affairs in other countries for which they received commission. Appellant also received services of repair and overhaul of aircrafts abroad.
The revenue demanded service tax of Rs. 65.48 Crores on the said activities along with interest and penalty. According to the Appellant, the repair services were performed abroad and therefore not taxable u/s. 66A of the Finance Act, 1994. In respect of services received from GSA’s, the Appellant submitted that since the services were received by the Appellant’s branches, the same is not taxable in India and referred to Rajesh Exports Ltd. reported in 2013 (29) STR 147 (Tribunal).
Held:
There being no evidence to the contrary, the Hon. Tribunal held that the services of repair and maintenance were performed wholly abroad and hence the demand was unsustainable in terms of the provisions of Rule 3(1) of the Taxation of Service (Provided from outside India and received in India) Rules, 2006. After perusing the relevant clauses of the agreement with the GSAs as regards commission paid to them, the Tribunal held that the said service was used by the Appellant in India in relation to their business located in India and therefore would be liable to pay service tax on the same.
