Service Tax on chartering of Aircrafts - CBEC clarifies
IT has been brought to the notice of the Board that many non-scheduled operators engaged in the business of giving the right to use the aircraft to its customers (Chartering of aircraft) are not paying service tax.
Board clarifies that, “ With effect from 16.05.2008, service provided to any person by any other person in relation to supply of tangible of goods including machinery , equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances is taxable service under Section 65 (105)(zzzzj) . Chartering of aircrafts by a client only confers him with the right to use the aircraft and the owner of the aircraft in such case does not transfer right of possession. As to whether effective control over the aircrafts is transferred or not would be a question of fact to be determined in each case. Where the crew is also provided by the owners of the aircraft as in a wet lease of aircraft effective control is not transferred.”
Board wants the field officers to examine the facts of each case of aircraft leasing in their jurisdiction and take action to recover tax wherever due.