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2017 (9) TMI 625 - AT - Service Tax


Issues:
Taxable service valuation dispute - Inclusion of PSF and airport taxes in taxable value for airlines.

Analysis:
1. The appeals were against the impugned order of the Commissioner (Appeals) regarding the valuation of taxable service provided by the appellants, who operated airlines. The Revenue alleged that the appellants had not properly calculated the value of the taxable service, specifically regarding the inclusion of passenger service fee (PSF) and airport taxes in the taxable value. The Original Authority confirmed a service tax liability against the appellants, which was upheld by the Commissioner (Appeals).

2. The appellant's counsel argued that PSF and airport taxes should not be included in the taxable value for airlines, citing previous Tribunal decisions and legal provisions. They contended that the charges collected were not for services rendered by the appellants but were obligations towards airport authorities. The appellant had remitted the collected charges, including service tax, to the authorities. Documents supporting this argument were submitted, including agreements and invoices.

3. The Revenue argued that the gross amount paid by passengers for air travel, which included PSF and airport taxes, should be fully taxable under Section 67 of the Act. They contended that the appellant's exclusion of certain charges from the gross amount was not supported by legal provisions. The Tribunal had previously held that PSF and airport taxes should not be included in taxable value, but the Revenue sought a reexamination of the case based on new evidence.

4. After considering the arguments and documents presented, the Tribunal analyzed the legal provisions and previous decisions. They noted that PSF and airport taxes were not to be included in the assessable value for air travel services, as per Tribunal precedents. The charges were related to services provided by airport authorities and were not directly attributable to the appellants' services.

5. The Tribunal further examined the nature of the charges, such as PSF, and the statutory framework governing them. They found that the charges were for services provided to passengers at airports and were not part of the appellants' air travel services. The Tribunal agreed with the appellant that including PSF in the taxable value could lead to double taxation, as it was already considered part of airport services.

6. The Tribunal concluded that the impugned order was not sustainable and set it aside, allowing the appeals in favor of the appellants. They emphasized the need for clear legal provisions to support the inclusion or exclusion of specific charges in the taxable value for airlines.

This detailed analysis of the judgment highlights the key arguments, legal interpretations, and conclusions reached by the Tribunal regarding the valuation dispute involving PSF and airport taxes in the taxable value for airlines.

 

 

 

 

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