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2018 (12) TMI 788 - AT - Service TaxValuation - inclusion of PSF and airport taxes in assessable value - pure agent services - Section 67 of Finance Act, 1994 readwith Service Tax Determination of Value Rules, 1994 - Held that - The matter is no longer res-integra as several decisions on the same issue have already been passed by this Tribunal - reliance placed in the decision in the case of Austrian Airlines vs. Commissioner of Service Tax 2016 (9) TMI 373 - CESTAT NEW DELHI , where following the Tribunal in the case of M/s Continental Airlines Inc. Vs CST, New Delhi 2015 (7) TMI 1079 - CESTAT NEW DELHI wherein it was held that the airport taxes as also the passenger service fees collected by the airlines on behalf of the airports and paid to them are not includable in the assessable value for the purpose of levy of service tax. Demand set aside - appeal allowed - decided in favor of appellant.
Issues:
Service tax liability on Passenger Service Fee (PSF) and airport taxes collected by an airline. Analysis: The appellant, an airline, was registered with the service tax department for transporting passengers by air service. The department contended that the appellant collected fares under various heads, including PSF and airport taxes, but discharged service tax only on basic fare, fuel surcharge, and insurance surcharge. The Commissioner confirmed a service tax demand, including interest and penalty. The appellant argued that as pure agents, they collected PSF and airport taxes from passengers and transferred them to airport authorities, which should not be included in the taxable value of the service provided under Section 67 of the Finance Act, 1994. The Tribunal considered previous decisions on similar issues and noted that PSF and airport charges collected by airlines should not be included in the taxable value of services provided. The Tribunal cited the case of Lufthansa German Airlines, emphasizing the need for documentary evidence to support the exclusion of such charges. The Tribunal highlighted that the charges collected on behalf of airport authorities without any mark-up or tax element should not be considered part of the taxable value unless proven otherwise. The appellant relied on Rule 6 of the Service Tax (Determination of Value) Rules, 2006, which excludes taxes levied by the government on air passengers if shown separately on the ticket or invoice. The Tribunal found that the appellant had collected airport taxes and PSF in compliance with relevant regulations, showing them separately on tickets. Therefore, these charges were not includible in the assessable value of services provided by the appellant, especially post the amendment of Rule 6 in 2010. Based on the analysis and precedent, the Tribunal held that PSF and airport taxes were not to be included in the assessable value of services provided by the airline. Consequently, the order-in-original was set aside, and the appeal was allowed with consequential relief. The decision was pronounced in the open court, emphasizing the dismissal of the original order due to lack of merit and the allowance of the appeal based on the established legal principles and factual circumstances.
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