2010 (4) TMI 396 - AT - Service Tax

Valuation- Stay- Service Tax Paid on basic fare. Fuel and insurance charges and passenger service fee sought to be included in taxable value. Held that- mater requiring extensive examination. Service tax on basic fare already paid. Pre-deposit waived. Recovery stayed.

Summary

Issues:
1. Applicability of service tax liability on services provided to passengers embarking in India.
2. Inclusion of fuel, insurance charges, passenger service fee, and airport taxes in the assessable value for service tax calculation.
3. Valuation of taxable service as per Section 67 of the Finance Act, 1994.
4. Requirement of pre-deposit during appeal proceedings.
5. Stay of realization of demand pending appeal.
6. Consideration of the case as not setting a precedent for future cases.

Analysis:

1. The appellant argued against the demand for service tax, contending that the service tax liability should not apply if passengers embark in India, as per Rule 65(105)(zzo) of the Finance Act, 1994. The appellant highlighted that the service tax had already been paid on the basic fare, and the inclusion of fuel, insurance charges, passenger service fee, and airport taxes in the assessable value was disputed. The appellant sought a stay on the demand pending resolution of the appeal.

2. The Departmental Representative (DR) emphasized that the valuation of taxable service under Section 67 should consider all elements contributing to the service. The Assessing Authority had determined the appropriate valuation, leading to the DR's argument in favor of a pre-deposit requirement during the appeal process.

3. The Tribunal acknowledged the importance of valuation in taxable services and the potential for disputes in this regard. Recognizing the need for a detailed examination of the case's factual elements, the Tribunal decided not to set a precedent with this order due to the unique circumstances. The Tribunal granted a stay on the realization of the demand during the appeal, allowing either party to request an early hearing given the case's recurring nature.

In conclusion, the judgment addressed the issues of service tax liability, inclusion of various charges in assessable value, valuation of taxable service, pre-deposit requirements, and the stay of demand realization. The Tribunal emphasized the need for thorough examination and debate on the case's merits, ensuring a fair resolution while refraining from setting a precedent for future cases.