2017 (12) TMI 1550 - AT - Service Tax

Valuation - Inclusion of value of airport taxes/ passenger service fee - Transportation of Passengers embarking in India for International journey by Air Service - Held that - it is a settled position of law that passenger service fee and airport taxes should not be included in the taxable value - reliance placed in the case of M/s. American Airlines Versus C.S.T., Delhi 2016 (7) TMI 92 - CESTAT NEW DELHI - appeal allowed - decided in favor of appellant.

Summary

Issues:
Inclusion of value of airport taxes/passenger service fee in taxable value for Service Tax liability under Section 65(105)(zzzo) of the Finance Act, 1994.

Analysis:
The judgment by the Appellate Tribunal CESTAT Delhi involved the interpretation of whether the value of airport taxes and passenger service fee should be included in the taxable value for the purpose of computing Service Tax liability under Section 65(105)(zzzo) of the Finance Act, 1994. The Tribunal noted that the issues in both appeals were identical and proceeded to hear them together. The appellant's advocate referred to a previous decision in the case of American Airlines v/s CST, where it was concluded that such charges should not be included in the taxable value. On the other hand, the Revenue relied on a different case involving British Airways PLC to argue for the inclusion of these charges in the taxable value.

Upon considering the arguments from both sides, the Tribunal examined the previous judgments, including the case of American Airlines, which had already addressed the issue. The Tribunal found that the charges like passenger service fee and airport taxes collected from passengers were deposited with the airport authority/licensee and therefore should not be included in the taxable value for Service Tax liability calculation. The Tribunal also referenced other relevant judgments, such as Lufthansa German Airlines v. CST and Continental Airlines Inc. v. CST, which supported the non-inclusion of these charges in the assessable value for Service Tax purposes.

Based on the settled legal position that passenger service fee and airport taxes should not be part of the taxable value, the Tribunal held that the impugned order confirming the Service Tax demand was not valid for judicial scrutiny. Consequently, the Tribunal set aside the impugned order, allowed the appeal filed by the assessee-appellant, and dismissed the appeal filed by the Revenue. Both appeals were disposed of accordingly by the Tribunal.