Commissioner CGST Delhi South Commissionerate vs. Japan Airlines International Co LTD
Facts
The Commissioner of CGST, Delhi South (Appellant) filed an appeal against an order of the Central Excise and Service Tax Appeal Tribunal (CESTAT). The Respondent, Japan Airlines International Co. Ltd., was issued a Show Cause Notice dated 21.10.2015, proposing a demand for service tax. The core dispute involved the taxability of tickets booked from outside India for travel originating in India and the correct computation of the tax liability, particularly concerning the exchange rate used. The CESTAT had remitted the issue of taxability back to the Adjudicating Authority for fresh consideration. The High Court noted that the CESTAT's observation that the exchange rate was not disputed was contradicted by the Adjudicating Authority's order.
Held
The High Court held that the issue of taxability of receipts for tickets booked outside India for travel commencing in India was remitted back to the Adjudicating Authority. Therefore, the Court did not decide on the taxability itself. However, regarding the computation of the demand, the Court found that the Adjudicating Authority had raised a valid point that the Respondent had not substantiated its claim of a constant exchange rate of 1.86 during the period February 2010 to January 2015. The Adjudicating Authority had noted the lack of proper explanation from the Respondent regarding how the figures in JPY were arrived at, especially given that tickets were booked from various destinations involving different foreign currencies. Consequently, the High Court allowed the appeal, set aside the CESTAT's order concerning the computation based on the exchange rate of 1.86, and remitted this aspect also to the Adjudicating Authority for reconsideration, contingent upon the outcome of the taxability determination. All other contentions were left open.
Key Issues
1. Whether the Respondent is liable to pay service tax for tickets booked from outside India in respect of ‘Travel by Air Service’ for journey starting from India with effect from 01.05.2006? (This issue was remitted back to the Adjudicating Authority and not decided by the High Court). 2. Whether the demand raised vide Show Cause Notice dated 21.10.2015 has been computed correctly in INR, specifically concerning the applicable exchange rate for the period February 2010 to January 2015? Contentions: Petitioner (Appellant): Argued that the Adjudicating Authority correctly found that the Respondent failed to provide material to establish a constant exchange rate of 1.86 during the disputed period, and thus the computation based on this rate was incorrect. Respondent: The judgment does not record specific arguments from the Respondent regarding the exchange rate computation, but it notes their contention that figures were provided in Japanese Yen (JPY) and that the Commissioner's findings went beyond the scope of the Show Cause Notice.
Sections Cited
Section 73
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Cause title — parties, addresses and appearances
O R D E R %
2024
The present appeal has been preferred positing the following questions of law for our consideration: “a. Whether the Respondent is liable to pay service tax for tickets booked from outside India in respect of ‘Travel by Air Service’ for journey starting from India with effect from 01.05.2006? b. Whether the demand raised vide Show Cause Notice dated 21.10.2015 has been computed correctly in INR?”
Having heard learned counsel for the parties and on going through the order of Central Excise and Service Tax Appeal Tribunal [“CESTAT”] which stands impugned before us, we find that insofar as the taxability of the receipts received by the respondent is concerned, those were state
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