2009 (7) TMI 686 - HC - Service Tax

Airport or a Civil Enclave Service- whether respondent or the Airport Authority is liable to pay service tax for the services rendered to visitors who enjoy the facility by remitting entrance fee to the respondent. Finding absent in impugned Tribunal Order on payment of Service Tax on entrance tickets by airport authority. Held that- respondent acting as agent under licence agreement with airport authority and liable to Service tax. Original authority to verify and respondent not required to pay tax if such tax paid by airport authority. Tribunal order set aside.

Summary

Issues:
1. Liability for service tax on services provided in an Airport.
2. Determining the service provider for service tax payment.
3. Verification of service tax payment by Airport Authority.
4. Dispute regarding service tax collection between respondent and Airport Authority.

Analysis:
1. The appeal challenged the Tribunal's decision on the liability for service tax under Section 65(105)(zzm) of the Finance Act, 1994, related to services provided in an Airport. The respondent, under a license agreement with Calicut Airport Authority Ltd., collected entrance fees from visitors. The Department issued a notice for service tax, which was confirmed by the first appellate authority. The Tribunal ruled that only the Airport Authority provided services, absolving the respondent. The Department appealed this decision, leading to the current judgment.

2. The key question was whether the respondent or the Airport Authority was liable to pay service tax for services provided to visitors paying entrance fees. The respondent's counsel argued that the Airport Authority provided the services, making them the service provider. However, the Department's Standing Counsel contended that the respondent, through the license, became the service provider by allowing visitors to enjoy services for a fee. The judgment emphasized that the gross amount charged for services provided, in this case, the admission ticket fee, determined the service tax liability. Despite the Airport Authority rendering the services, the respondent, acting as an agent under the license agreement, was deemed the service provider, thus liable for service tax.

3. While no evidence showed the Airport Authority paid service tax for the period in question, the respondent claimed they had paid based on a clarification from the Central Board. The court directed the original authority to verify this claim and the Airport Authority's service tax payments for the relevant period. If confirmed, the respondent would be exempt from liability; otherwise, they would be responsible for the service tax as determined earlier.

4. The respondent mentioned willingness to collect service tax, but the Airport Authority prohibited it until a specified date. Subsequently, the respondent complied with collecting and remitting service tax. The court noted that the dispute between the respondent and the Airport Company was beyond the current proceedings, suggesting the respondent seek appropriate resolution independently.