2018 (4) TMI 847 - AT - Service Tax

Valuation - includibility - passenger fee, user development fee, Development charges collected in the tickets and remitted to the airport authorities - Held that - Since the appellant is the intermediary between the passenger and the airport authority and is not providing any taxable service with regard to the collection and deposit of such charges, the value of such charges cannot be included in the taxable value for payment of Service Tax - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of service tax liability on components of air tickets, applicability of service tax on statutory levies and other charges collected by the appellant, precedent cases influencing the decision.

Analysis:
The case involved a dispute regarding the service tax liability on various components of air tickets issued by the appellant, a branch office of British Airways in India. The appellant provided the service of "Transport of Passenger embarking in India for international journey by air." The appellant paid service tax on components like base fare, fuel surcharge, and insurance but did not pay on statutory levies and other charges, arguing that these charges imposed by the government and airport authorities did not constitute a service related to the taxable service provided by the appellant.

The appellant contended that charges like passenger fee, user development fee, and development charges collected in tickets and remitted to airport authorities should not be subjected to service tax as they were not related to the services provided by the appellant. The appellant cited previous tribunal decisions in similar cases to support their argument, emphasizing that no service tax liability should arise on charges collected on behalf of airport authorities and government.

The Revenue, however, supported the findings of the impugned order confirming the service tax demand on all components of the air tickets collected by the appellant. After hearing both sides and examining the case records, the Tribunal held that the appellant, as a service provider, was liable to pay service tax on the taxable value of services received from passengers for international air travel. However, charges like PSF, User Development Fee, and Other Development Charges collected by the appellant on behalf of airport authorities and government, and subsequently paid to them, were not considered taxable as the appellant acted as an intermediary and did not provide any taxable service related to these charges.

The Tribunal, in line with the appellant's arguments and previous decisions, concluded that no service tax liability would arise on charges collected and remitted to airport authorities and government. As a result, the impugned order was set aside, and the appeals were allowed in favor of the appellant, providing consequential relief.

In the operative portion pronounced in open court, the Tribunal ruled in favor of the appellant, highlighting that the appellant's collection and remittance of certain charges to airport authorities and government did not attract service tax liability, thereby overturning the service tax demand imposed on the appellant for statutory levies and other charges.