2014 (12) TMI 458 - AT - Service Tax

Waiver of pre-deposit - levy of service tax on collection of development fees for development of the airport in future - airport services - Held that - Levy of development fee has been struck down by the Hon ble Supreme Court holding that the applicant is not entitled to collect the development fee from the passengers through airlines in the case of Consumer Online Foundation (2011 (4) TMI 1275 - SUPREME COURT OF INDIA). Therefore, it is not a service and the same view has been taken by this Tribunal in the case of Cochin International Airport Ltd. (2009 (7) TMI 120 - KERALA HIGH COURT) which has been affirmed by the Hon ble Kerala High Court. Further, as argued by the learned Spl. Counsel that intention of the parties has to be seen as they have collected the development fee as service to be provided in future. We have seen the intention of the parties and gone through the records placed before us. On the basis of the records, we find that from May 2012 onwards the applicants have charged tax on these development fees from the airlines and whatever service tax collected by them has been paid to the department. In these circumstances, prima facie, the applicants have made out a case for complete waiver of pre-deposit of the entire amount of service tax, interest and penalties. Accordingly, we waive the requirement of pre-deposit of the entire amount adjudged and stay recovery thereof during the pendency of the appeals. - Stay granted.

Summary

Issues:
1. Waiver of pre-deposit of service tax, interest, and penalties confirmed against the applicants.
2. Whether the development fee charged by the applicants is subject to service tax under "airport services."
3. Interpretation of the intention behind the collection of development fee by the applicants.
4. Comparison of legal precedents regarding the collection of development fees and service tax liability.

Analysis:

1. The judgment revolves around the applicants seeking a waiver of pre-deposit of service tax, interest, and penalties confirmed against them. The applicants, a Company managing operations at an airport, charged a development fee from departing passengers, leading to demands for service tax, interest, and penalties for the period April 2009 to February 2013.

2. The core issue addressed is whether the development fee collected by the applicants is liable for service tax under the category of "airport services." The applicants argued that the development fee was not a service based on legal precedents, including a Supreme Court ruling and a Tribunal decision, which held that no service tax is leviable on development fees.

3. An essential aspect considered was the intention behind the collection of the development fee by the applicants. The Revenue contended that the fee was charged for providing services to departing passengers, making it subject to service tax. However, the Tribunal analyzed the records and found that the applicants started charging service tax on the development fees from May 2012 onwards, indicating a shift in intention towards complying with tax obligations.

4. The judgment compared legal precedents, including the Supreme Court's decision on the nature of development fees and the Tribunal's ruling on a similar issue, to determine the liability of the applicants. The Tribunal ultimately ruled in favor of the applicants, citing the striking down of development fee collection by the Supreme Court and the Tribunal's previous decision, leading to the waiver of pre-deposit of the entire amount of service tax, interest, and penalties during the appeal process.