Supreme Court to examine service tax on Reliance charter flights for executives

New DELHI: On Tuesday, the Supreme Court accepted an objection to the Charter Flight Services used by Reliance Commercial Dealer LTD (RCDL) by the Reliance Industry executives on Tuesday.

RCDL runs Charter flights for Ril’s candidates and carries passengers on demand according to the company’s needs.

Justices Manoj Misra and Ujjal Bhuyan issued notifications to the reliance subsidiary and observed that the classification of such services would decide on a greater legal problem.

The court directed both sides to written shipments within two weeks.

Misra, “This is an important issue to be taken into consideration and making decisions because it contains a pure law problem related to comments and classification. Number of declaration. After taking into account the above, we consider it appropriate to ask the parties to request written applications together with the relevant provisions of the statute.”

The Tax Department argued that RCDL had effectively rented aircraft, which should withdraw higher taxes such as equipment rental. RCDL claims to fly passengers on charter flights, such as normal air transportation services at lower rates.

If the Supreme Court sets rules in favor of the tax department, the company Charter services may significantly become more expensive, companies face retrospective tax demands and higher costs, and the use of special jet for managers makes it more expensive.

What do the rules say?

Pursuant to the DGCA rules, unplanned air transportation services (passenger) include the operation of passengers, mails or goods without a fixed timeline, regulation or optional. Operators hold the permission of an unplanned operator (NSOP) and allow customers to fly at any time, or by selling one seat or renting the entire plane.

Currently, passenger transportation services are taxed at normal airlines (eg 5% below GST for economy class), while aircraft rental or rental (STRU) is treated as equipment rental (up to 18% below GST).

The Service Tax Commissioner Mumbai approached the Supreme Court against the 2 May Customs, Consumption and Service Tax Court of Appeal (Cestat), which chose confidence and eliminated tax demands. La42 Crore 2008-09 FY to 2010-11 financial year.

The problem appeared in 2008 after Signing agreements with RIL to provide domestic and international air transportation services for RCDL managers, staff and candidates, and gave RIL ‘the right to refuse to use certain aircraft. RCDL was operated under an NSop given by DGCA for such passenger services.

However, based on intelligence inputs, the tax department claimed that RCDL mainly hired aircraft based on time without paying valid service tax under the Category of ‘Supply of Concrete Goods for Use’ (Stu). This led to three demonstrations between 2009-2011.

In March 2016, the commissioner upheld these tax requests and encouraged RCDL to apply to Cestat Mumbai.

RCDL argued that their agreements are for passenger transportation, not aircraft rental, and that internal flights can be taxed until June 2010, paying service tax under passenger services.

The company stressed that it carries all operational costs, that fees are based on real flight hours, and that no invoice has been upgraded if the regulatory or weather problems are canceled due to regulatory or weather problems, and proved that it was not a leasing regulation.

However, the Tax Department insisted that RCDL had effectively provided RIL for use for use by pointing to the ‘first rejection right’ article as proof of the leasing regulation. In addition, unlike normal air transportation services, no individual passenger tickets are given.

In the May 2 order, Cestat ruled in favor of RCDL and gave permission to operate as a passenger transport provider and said that RIL has never received or operational control of the plane.

The court concluded that RCDL’s services were rightly classified under a part of the 1994 Finance Law, not rightly, not as stu. Chapter 65 (105) (Zzzo) of the Finance Law, Taxer Flights as 1994 Passenger Transportation Services.

When the Court is provided for use of the STU tax only for use or not to control the user, the case is not so.

Aside from the commissioner’s 2016 decision, Cestat completely overturned tax demands, interest and penalties.

The victim has now mobilized the Supreme Court, which will decide whether such corporate charter flights will be taxed as aircraft rents or passenger transport – this may have significant effects on corporate aviation.

A query sent to Reliance Industries by E -Post remained unanswered until the press time.

RCDL, the Reliance Industries’s air rental arm, operates a 6.4 -year fleet with average aircraft age, according to the aviation data site PlaneSpotters.net.

According to the Indian Airport Authority data, general aviation aircraft movements increased sharply at the beginning of 2025 – 43.3% (26,890 flights) in January and 13.9% in February (27.360 flights). Between April 2024 and February 2025, Charter flight movements increased by 19.7% to 253,000 flights.

A Denzev Research Report, as the region’s labor aviation survived pandem, an annual increase of 1.2% in Asia-Pacific 156 active business jets, he said. India was the largest special jet fleet in South Asia and the third size of Asia-Pacific, and in 2023 with more than 151 registered jets.

Poonawalla Aviation, Taj Air, Jetsetgo, Hype Luxury, Bookmycharters and Club One Air, among the leading Indian regulations providers, offer luxury special flight options.

The cost of having a special jet La16 Crore for light jets such as Cirrus Vision La550 crore for long -range jets such as Gulfstream G650.