2019 (2) TMI 577 - AT - Service Tax

Valuation - transport of passenger by air service - inclusion of passenger service fee and airport taxes in assessable value - Held that - The matter is no longer res integra as the issue has already been decided by this Tribunal in the case of M/s. Royal Jordanian Airlines and others vs. CST, Delhi 2017 (11) TMI 1407 - CESTAT NEW DELHI , where it was held that non-inclusion of these charges in the taxable value for air travel service by the appellants - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Applicability of service tax on the amount received from passengers for passenger service fee and airport taxes in the case of airlines services.

Analysis:
The case involves the appellants, engaged in operating airlines services, who were under scrutiny by the service tax department for allegedly not paying service tax on the entire amount received from passengers. The department contended that the appellants were liable to pay service tax on the amounts collected under passenger service fee (PSF) and airport taxes, in addition to basic fare, fuel surcharges, and administrative charges. The dispute reached the Appellate Tribunal after being confirmed by the Commissioner (Appeals).

The Tribunal referred to a previous judgment in the case of M/s. Royal Jordanian Airlines and others vs. CST, Delhi, where it was held that charges like PSF and airport taxes are not to be included in the taxable value for air travel service. The Tribunal emphasized that these charges are not directly related to air travel but are for services provided by the Airport Authority to passengers. The appellants provided documents to support their defense, showing that the PSF had been duly remitted by the Airport Authority. The Tribunal agreed that including PSF in the taxable value could lead to double taxation, as it is already part of airport services under the relevant statutory provisions.

The Tribunal also noted that the Revenue's argument about the appellant collecting service tax along with PSF not being within the scope of the Finance Act, 1994, was not substantiated in the show cause notice or by the Original Authority. As such, the Tribunal held that the impugned order was not sustainable and set it aside, allowing the appeal in favor of the appellants. The decision was based on the principle established in previous cases and the specific circumstances of the matter at hand, aligning with the Tribunal's consistent interpretation regarding the tax liability of charges like PSF and airport taxes in the context of air travel services.