2011 (6) TMI 178 - AT - Service Tax

Demand - Airport services - The undisputed facts in this case are assessees were running an establishment in the name of lounge within premises of Indira Gandhi International Airport, Delhi - It is seen that the said order clearly indicates that assessees herein were rendering the facility to the bona fide passengers of the airlines who produce lounge cards - It can be seen from the record and bills and invoices raised by the appellant on various airlines that the assessee has been billing airlines for the food/drinks and that they are discharging VAT at the applicable rate - It is seen that the Show Cause Notice only charges for recovery of the amount under the head Airport service which in our considered opinion will not be applicable in the present case - Decided in favour of the assessee

Issues Involved:
1. Whether the services rendered by the assessee in the lounge at Indira Gandhi International Airport fall under the category of "Airport services" as per Section 65(105)(zzm) of the Finance Act, 1944.
2. Whether the assessee is liable to pay service tax on the supply of food and beverages in the lounge.
3. Whether the value of goods and materials sold should be excluded from the service tax liability.
4. Whether the extended period of limitation for issuing the Show Cause Notice is applicable.

Issue-wise Detailed Analysis:

1. Categorization under "Airport Services":
The primary issue was whether the services provided by the assessee in the lounge at Indira Gandhi International Airport could be categorized as "Airport services" under Section 65(105)(zzm) of the Finance Act, 1944. The adjudicating authority had conflicting views in two separate cases: confirming the demand in one and dropping the proceedings in another. The Tribunal analyzed the agreement between the assessee and the Airport Authority of India (AAI), which indicated that the assessee was licensed to operate the lounge and provide food and beverages. The Tribunal concluded that the services rendered by the assessee did not fall under "Airport services" as they were not directly provided by the AAI or a person authorized by it to manage the airport or civil enclave.

2. Liability to Pay Service Tax on Food and Beverages:
The assessee argued that the supply of food and beverages in the lounge was subject to sales tax, not service tax, citing the Apex Court judgment in the case of State of Punjab v. Associated Hotels of India Ltd. The Tribunal noted that the assessee was raising invoices for the supply and sale of snacks and drinks, indicating the discharge of applicable sales tax/VAT. It was determined that the primary function was the sale of food and beverages, not the provision of a service.

3. Exclusion of Value of Goods and Materials Sold:
The assessee contended that the value of goods and materials sold should be excluded from the service tax liability. They argued that they were paying VAT on the entire consideration received from the airlines, and no extra charges were levied for services. The Tribunal agreed with this submission, noting that the amounts charged were for food and beverages, and there was no separate charge for services, thus negating the need for service tax on these transactions.

4. Extended Period of Limitation:
The assessee argued that the extended period of limitation for issuing the Show Cause Notice was not applicable as they had a bona fide belief that the transactions did not attract service tax. The Tribunal did not specifically address this issue, as the appeals were disposed of on the merits of the case itself, making further findings on this point academic.

Conclusion:
The Tribunal concluded that the services rendered by the assessee did not fall under the category of "Airport services." The appeal filed by the assessee was allowed, and the appeal filed by the revenue was rejected. The Tribunal did not render findings on other detailed submissions, considering them academic in nature.

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