2016 (9) TMI 373 - AT - Service Tax

Valuation - includability - airport tax and passenger service fee in the assessable value of the services - transport of passenger services by Air embarking in India for International Journey - Held that - the issue stands covered by the Tribunal in the case of M/s Continental Airlines Inc. Vs CST, New Delhi 2015 (7) TMI 1079 - CESTAT NEW DELHI wherein it was 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 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, inasmuch as the issue is decided, the impugned order is set aside. - Decided in favour of appellant with consequential reief

Summary

Issues: Valuation of services for service tax purposes

In this case, the appellant, engaged in providing passenger transport services by air for international journeys, was registered with the Service Tax Department for payment of service tax. The dispute arose regarding the inclusion of airport tax and passenger service fee in the assessable value of the services provided by the appellant. The impugned order confirmed service tax liability, interest, and penalties based on this valuation issue.

Both parties agreed that a previous Tribunal decision in the case of M/s Continental Airlines Inc. vs CST, New Delhi, held that airport taxes and passenger service fees collected by airlines on behalf of airports are not includable in the assessable value for service tax levy. Following this precedent, the Tribunal set aside a service tax demand against the present appellant in a similar case involving Lufthansa German Airlines vs CST (Adjn.), New Delhi.

Considering the settled issue based on the Tribunal's previous decisions, the impugned order was set aside, and the appeal was allowed in favor of the appellant. Additionally, a miscellaneous application filed by the appellant for additional grounds and evidence was disposed of as the appeal was allowed on merits.

Therefore, the Tribunal ruled in favor of the appellant, holding that the airport tax and passenger service fee should not be included in the assessable value for the purpose of service tax levy, based on established legal precedents and interpretations.