2012 (7) TMI 284 - AT - Service Tax

Valuation - transportation of passengers for International journey by air along with other services to its clients - While issuing tickets to the passengers, they were collecting passenger service fees (PSF) on behalf of the International Airport Authority of India (IAAI) and remitting it to IAAI - They had not included these amounts collected from the passengers, in the value of their services Held that - As per Section 67 of the Finance Act, 1994, the value of any taxable service shall be the gross amount charged by the service provider for such service provided or to be provided. The amount in question is not paid for the services provided by the appellants. Wavier of pre-deposit granted.

Summary

Issues:
1. Whether passenger service fees and airport taxes collected by the airline should be considered as part of the value of services rendered for the purpose of service tax assessment.

Analysis:
The appellant, an airline, collected passenger service fees (PSF) and airport taxes from passengers embarking on international journeys. The Revenue contended that these charges should form part of the value of services rendered by the airline. The appellant argued that PSF was collected on behalf of the International Airport Authority of India (IAAI) to streamline passenger contact points and that airport taxes were a statutory levy not contributing to their revenue.

The Revenue argued that any payment made by passengers to the airline should be considered part of the value of services rendered. They emphasized that the collection and remittance of these amounts to another agency did not change this position. The appellant's counsel highlighted that there was no evidence of overcharging beyond what was remitted to IAAI.

The Tribunal examined the arguments presented by both sides. Referring to Section 67 of the Finance Act, 1994, which defines the value of taxable services as the gross amount charged by the service provider, the Tribunal found it doubtful whether the PSF and airport taxes could be considered part of the value of services provided by the airline. They noted a previous decision by the Madras Bench granting a full waiver in a similar case involving SriLankan Airlines.

Based on the analysis, the Tribunal granted a waiver of the pre-deposit of disputed dues arising from the impugned order and ordered a stay on the collection of such amounts during the appeal process. The judgment was dictated and pronounced in open court.