2016 (6) TMI 581 - AT - Service Tax

Valuation - Includability - airport tax and passenger service fee - transport of passengers services - Held that - the issue stands covered by the Tribunal decision in the case of M/s Continental Airlines Inc. vs. CST, New Delhi 2015 (7) TMI 1079 - CESTAT NEW DELHI . Its stand held that the airport taxes as also the passenger service fees collected by the airlines on behalf of the airports and paid to them are not includable in the assessable value for the purpose of levy of service tax. By following the said decision of the Tribunal, the service tax demand against the present assessee for the earlier period raised on the same grounds was set aside by the Tribunal in the case reported as Lufthansa German Airlines vs. CST (Adjn.), New Delhi 2016 (4) TMI 780 - CESTAT NEW DELHI . Therefore, in as much as the issue is decided, the impugned order is set aside. - Decided in favour of appellant with consequential relief

Summary

Issues: Valuation of services for service tax purposes.

The judgment deals with the issue of valuation of services for service tax purposes in the context of an appellant engaged in providing transport of passengers services by air embarking in India for international journey. The appellant was registered with the Service Tax Department for payment of service tax. The dispute arose regarding whether the appellant was required to include the airport tax and passenger service fee in the assessable value of the services provided by them. The impugned order confirmed service tax along with interest and penalties based on this valuation issue.

Both parties agreed that the issue was covered by a Tribunal decision in the case of M/s Continental Airlines Inc. vs. CST, New Delhi, where it was held that airport taxes and passenger service fees collected by airlines on behalf of airports and paid to them are not includable in the assessable value for the purpose of levy of service tax. The Tribunal's decision in the case of Lufthansa German Airlines vs. CST (Adjn.), New Delhi further supported this position, setting aside a service tax demand against the appellant for similar grounds.

The judgment relied on the precedents set by the Tribunal in similar cases and concluded that the airport taxes and passenger service fees collected by the appellant were not to be included in the assessable value for the purpose of levying service tax. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief to the appellant. The operative part of the order was pronounced in the open court, providing a favorable outcome for the appellant in the valuation of services for service tax purposes.