2017 (3) TMI 935 - AT - Service Tax

Valuation - airport taxes, passenger service fee (PSF) collected by the appellant from the passengers, in addition to base fare - whether included in the assessable value or not? - Held that - the amount collected from the passengers by the appellant, apparently, includes service tax. It is not clear as to how, when acting as an agent, for Airport Authority, with reference to collection of PSF, the appellant can collect the service tax also from the passengers. There can be no concept of pure agent for collecting tax on behalf of the client. Any amount collected as service tax from any person, cannot be passed on to any other person other than Government - While we note that any amount collected from the passenger specifically identified for the particular service, to be rendered by other than the appellants, are not to be included in the gross value, it is necessary to establish with documentary evidence the background of such fee or taxes, legal term of contractual obligation to collect and pay the amount on actual basis. These documentary evidences are not forthcoming in the present appeal - appeal dismissed - decided against appellant.

Summary

Issues:
Valuation of taxable service for service tax purpose, inclusion of airport taxes, passenger service fee (PSF), and fuel and insurance surcharge in the taxable value.

Analysis:
The case involved a dispute regarding the correct valuation of taxable services related to air transport of passengers for the period May 2006 to September 2007. The appellant, an airline, contested the inclusion of airport taxes and PSF in the taxable value for service tax calculation. The Revenue argued that the gross amount collected from passengers should be considered for service tax purposes. The Original Authority confirmed a service tax liability and imposed penalties. On appeal, the Commissioner (Appeals) modified the tax liability calculation but set aside the penalties under Section 80 of the Finance Act, 1994.

The appellant did not contest the tax liability on fuel and insurance surcharge but disputed the inclusion of PSF and airport taxes in the taxable value. The appellant claimed that these charges were collected on behalf of Airport Authorities and remitted to them in full, acting as agents without providing any service to passengers. The appellant failed to provide documentary evidence supporting their claim during the relevant period.

The Tribunal noted that the inclusion of fuel and insurance surcharges was not contested by the appellant. The main point of contention was the inclusion of PSF and airport taxes in the taxable value. Despite specific queries and extended time given to the appellant, no supporting evidence was provided. The Tribunal observed that the appellant collected service tax from passengers, which raised questions about their role as an agent for the Airport Authority.

The appellant's reliance on industry practices and previous cases was deemed insufficient without establishing factual evidence. The Tribunal emphasized the need for documentary evidence to exclude specific charges from the taxable value. The appellant's failure to provide supporting evidence led to the dismissal of the appeal due to the inability to establish crucial facts.

In conclusion, the Tribunal dismissed the appeal on the grounds of the appellant's failure to substantiate their claims with documentary evidence, specifically regarding the collection of PSF and airport taxes on behalf of Airport Authorities. The judgment highlighted the importance of providing factual evidence to support claims related to the valuation of taxable services for service tax purposes.