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Issues involved: Determination of liability for Service Tax on 'Users Fee' collected from outgoing international passengers by an airport.
Summary: Issue 1: Liability for Service Tax on 'Users Fee' The appeal was filed against Orders-in-Original passed by the Commissioner of Central Excise and Customs, Cochin, demanding Service tax on the 'Users Fee' collected by M/s. Cochin International Airport from outgoing international passengers. The Adjudicating Authority held that the fee collected formed part of the assessable value for Service Tax on 'Airport Services' as it had a nexus with the services provided to passengers. Penalties were also imposed under Sections 76 and 78 of the Finance Act. Judgment: Upon hearing the parties and examining the records, it was found that the 'Users Fee' of &8377; 500/- per outgoing international passenger was collected by the airport for revenue enhancement purposes and not as consideration for services rendered to passengers. The Kerala High Court's decision regarding a similar fee collection at Calicut Airport was cited, emphasizing that only the Airport Authority could levy fees for services provided to airliners, not passengers. The services such as ground handling and air traffic services were provided by separate entities and subject to Service Tax independently. It was noted that the 'Users Fee' collection had no direct relation to services rendered by the airport to individual passengers. Following the cessation of fee collection post the Kerala High Court's decision, it was held that the airport was not liable to pay Service Tax on the 'Users Fee' under the category of 'Airport Service'. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief. *(Operative portion of this Order was pronounced in open court on conclusion of hearing on 16-4-2007)*
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