2017 (12) TMI 1315 - AT - Service Tax

Levy of service tax - Airport services - passenger service fee - Held that - identical issue decided in the case of M/s Royal Jordanian Airlines, M/s China Eastern Airlines, M/s China Airlines, M/s KLM Royal Dutch Airlines Versus CST, Delhi 2017 (11) TMI 1407 - CESTAT NEW DELHI , where reliance placed in the case of M/s Continental Airlines Inc. Versus Commissioner of Service Tax, New Delhi 2015 (7) TMI 1079 - CESTAT NEW DELHI , where the Tribunal held against the inclusion of these charges in the taxable value for air travel service by the appellants - service tax not levied. Penalty on demand of service tax which was paid during the course of investigation - Held that - issue came up before the Tribunal in the case of American Airlines vs. CST, Delhi 2016 (7) TMI 92 - CESTAT NEW DELHI , where it was held that Mere omission to give correct information is not suppression of facts unless it was deliberate and that an incorrect statement cannot always be equated with wilful mis-statement - penalty set aside. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Demand of service tax on airport services and passenger service fee.
2. Levy of penalty on service tax demand.

Analysis:

Issue 1:
The appeal pertains to a demand of service tax on taxable airport services and passenger service fee for the period of October 2006 to September 2008. The Tribunal referred to a previous case involving Royal Jordanian Airlines where it was observed that the charges collected by the appellant, such as Airport Tax and Passenger Service Fee, were not includable in the assessable value of services provided. This decision was based on various legal provisions and exemption notifications. Consequently, the issue of demand of service tax was settled in favor of the respondent based on consistent precedents and legal interpretations.

Issue 2:
The next issue revolved around the levy of penalty on the service tax demand that was paid during the investigation process. The Tribunal cited a case involving American Airlines where it was noted that the allegations of suppression or wilful misstatement regarding the non-inclusion of charges like fuel surcharge, Passenger Service Fee, and airport taxes in the assessable value were untenable. The Tribunal emphasized that the burden of proof lies on the Revenue to establish wilful misstatement, and mere non-payment of duties does not automatically imply collusion or suppression. Based on legal precedents and the appellant's compliance with clarifications from authorities, the penalty under Section 78 was set aside, aligning with the principles laid down by the judiciary in similar cases.

In conclusion, the Tribunal dismissed the department's appeal, affirming the decisions in favor of the respondent on both issues based on legal interpretations, precedents, and the specific circumstances of the case.