Custom, Excise & Service Tax Tribunal
Kingfisher Airlines P. Ltd vs Commissioner Of Service Tax, Mumbai on 18 September, 2014
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No.
ST/694/12
- Mum
(Arising out Order-in-Original No. 26/STC-1/SKS/12-13 dated 26.07.2012 passed by the Commissioner of Service tax, Mumbai)
For approval and signature:
Honble Mr. Ashok Jindal, Member (Judicial)
Honble Mr. P.S. Pruthi, Member (Technical)
1. Whether Press Reporters may be allowed to see No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy Yes
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
Kingfisher Airlines P. Ltd.
Appellant
Vs.
Commissioner of Service tax, Mumbai
Respondent
Appearance:
Shri Sunil Agarwal, Advocate for the appellant Shri B.S. Meena, Addl.Comm. (AR) for the respondent CORAM:
Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical) Date of hearing : 18/09/2014 Date of decision : 18/09/2014 O R D E R No:..
Per: Ashok Jindal:
The appellant is in appeal against the impugned order wherein service tax has been demanded along with interest from them by invoking the extended period of limitation.
2. The facts of the case are that the appellants have an agreement for lending the money by BNP Paribas to purchase aircraft. BNP Paribas agreed to lend the money to the appellant on agreed terms. BNP Paribas secured their loans through COFACE in France for lending the money to appellant and pay insurance guarantee. Revenue is of the view that the service given to BNP Paribas is a service received by the appellant, therefore, same is covered under Banking and Finance Institution service. Accordingly, appellant is liable to pay service tax under Reverse charge mechanism. Proceedings were initiated against the appellant and demand along with interest has been confirmed by invoking the extended period of limitation. While passing the Adjudication order, the ld. Comm. did not impose any penalty on the appellant by giving the benefit of Section 80 of the Finance Act, 1994 holding that there was no malafide intention of the appellant not to pay service tax. Aggrieved from the same, the appellant is before us.
3. Shri Sunil Agarwal, ld. Counsel for the appellant appeared before us and submits that the appellant is not liable to pay service tax as the amount of insurance guarantee was paid by BNP Paribas to COFACE France for providing insurance guarantee on the money lended on account of insurance premium of the money lended to the appellant. There is no service received by the appellant although the appellant is beneficiary of that transaction. In these circumstances, appellant is not liable to pay service tax under the category of Banking and Finance Institution service under Reverse charge mechanism. He further submits that the service tax demand has been confirmed by invoking the extended period of limitation, whereas the Commissioner has dropped the penalty by giving benefit of Section 80 of the Finance Act, 1994 holding that the appellant has explained satisfactorily the reasons for not paying service tax. Therefore, the demand invoking extended period are to be set aside.
4. On the other hand, ld. AR submitted that the appellant is the receiver of the service directly or indirectly provided by COFACE to BNP Paribas. In these circumstances, the appellant is required to pay service tax under Reverse charge mechanism. He further submits that the appellant has suppressed the fact that on the said amount of insurance guarantee they are not paying service tax, therefore, the ld. Commissioner has rightly invoked the extended period of limitation. In these terms, the impugned order is required to be upheld.
5. Heard the parties.
6. In this case, the issue appeared before us is that who is the service provider and who is the service receiver. The fact of the case are clear and showing that the money lender BNP Paribas has secured the loan amount lended to appellant from COFACE France and have secured their money they have paid insurance guarantee to COFACE France. When these facts are clear in this case, therefore, the service receiver is BNP Paribas and the service provider is COFACE, France. The appellant is only the beneficiary of the transaction held between BNP Paribas and COFACE, France. As the appellant is neither service provider nor service recipient, the appellant is not liable to pay service tax at all under Reverse charge mechanism.
7. In these terms, we set aside the impugned order and allow the appeal with consequential relief, if any.
(Dictated in Court) (P.S. Pruthi) (Ashok Jindal) Member (Technical) Member (Judicial) //SR 4