2018 (5) TMI 875 - AT - Service Tax

Liability of service tax - Passenger Service Fees (PSF) and other taxes (international taxes) collected by the airlines as part of consideration when the tickets are issued to the passengers - Held that - an identical issue has come up for consideration before the Tribunal in the case of M/s Royal Jordanian Airlines & Ors. Vs CST, Delhi 2017 (11) TMI 1407 - CESTAT NEW DELHI , where it was held against the inclusion of these charges in the taxable value for air travel service by the appellants - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Liability to pay Service Tax on Passenger Service Fees and other taxes collected by airlines.

Analysis:
The appeal was filed against an Order-in-Original passed by the Commissioner of Central Excise, New Delhi, for the period from October 2010 to June 2012. The dispute revolved around the liability of the assessee-Appellants to pay Service Tax on Passenger Service Fees (PSF) and other taxes collected by airlines when issuing tickets to passengers. The Department demanded the Service Tax, leading to the appeal by the assessee-Appellants.

During the hearing, both sides presented their arguments, with the learned Chartered Accountant for the assessee-Appellants and the learned DR for the Revenue making their respective cases. The Tribunal noted that a similar issue had been considered in a previous case involving M/s Royal Jordanian Airlines & Ors. vs. CST, Delhi. The Tribunal referred to the case of Lufthansa German Airlines vs. CCE&ST, Delhi (Gurgaon), where it was observed that certain charges collected by the airlines, such as Airport Tax and Passenger Service Fee, were not includable in the assessable value of services provided by the airlines.

The Tribunal found that the appellant had complied with the relevant rules and regulations regarding the collection and display of these charges on tickets. It was also noted that these charges were not to be included in the assessable value of services provided by the appellant, based on previous decisions and exemption notifications. Therefore, following its earlier order and the principles established in previous cases, the Tribunal set aside the impugned order and allowed the appeal filed by the assessee-Appellants.

In conclusion, the Tribunal ruled in favor of the assessee-Appellants, stating that the charges in question were not to be included in the assessable value for Service Tax purposes, based on legal provisions, previous decisions, and exemption notifications.