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2017 (9) TMI 625 - AT - Service TaxValuation - service of transportation of the passengers by air - includibility - passenger service fee - airport taxes - The claim of the appellant is that the amount collected, as PSF and airport taxes are not towards considerations of air travel and hence are not liable to be taxed - Held that - the persons availing the facilities in airports are the passengers, who are in the process of either inward or outward air travel. The appellants are issuing tickets for such air travel, which in any case, cannot be performed unless the passengers enter and passes through the airports - The Airport Authority fixed certain charges as passenger service fee. This is apparently for the services rendered to the passengers in the airport. The passenger pay such charges as part of the ticket. Admittedly, service tax on such passenger service fee has been claimed to have been duly remitted by the Airport Authority, which was collected from the passengers by the appellant. Verification of these details can be made by the jurisdictional officers - addition of PSF in the taxable value at the hands of the appellant may result in double taxation. Admittedly, the PSF is forming part of airport service in terms of Section 65(105)(zzm). The very same PSF cannot be subjected to service tax under transport of passenger service. Appeal allowed - decided in favor of appellant.
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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