Budget 2010 - Amendment in meaning of passenger is also desirable to avoid disputes and then amendment with retrospective effect.

[C.A. Uma Kothari]

Journey by air as taxable service

Provisions of Section 65(105)(zzzo) are proposed to be substituted to cover levy of service tax on all passengers embarking in India for Domestic as well as International journey and to cover all classed of journey.

Definition of passenger:

In the existing provisions the meaning of passenger is given vide Section 65(77c) of the Finance Act, 1994. According to this, passenger means any person boarding an aircraft from Customs Airport for undertaking an international journey.

There is no proposal to amend this meaning. In absence of change in meaning of passenger as given in Section 65(77c) , to include passengers undertaking domestic journey, tax may not be levied without a long drawn process of interpretation on the principal of charging section and contextual interpretation. It appears that there is a drafting lapse while drafting the Finance Bill, 2010.

Carelessness in drafting provisions is rampant- who care we can amend law at any time:

We can say that carelessness in drafting of legal provisions is now a rampant feature. The reason is obviously the thinking of government and its draftsmen on the thinking

'who cares, we can amend law at any time and without any limitation to cover past period by amending law retrospectively?

We find several amendments proposed to be given retrospective effect. This is not good.

Analysis of existing and proposed relevant clauses are tabulated with remarks:

Existing clause	Proposed clause	Comments of author
Section 65 -  Definitions   (105) "taxable service" means any 1[service provided or to be provided], zzzo) to any passenger, by an aircraft operator, in relation to scheduled or non-scheduled air transport of such passenger embarking in India for international journey, in any class other than economy class. Explanation 1.- For the purposes of this sub-clause, economy class in an aircraft meant for scheduled air transport of passengers means, - (i) where there is more than one class of travel, the class attracting the lowest standard fare; or (ii) where there is only one class of travel, that class. Explanation 2. - For the purposes of this sub-clause, in an aircraft meant for non-scheduled air transport of passengers, no class of travel shall be treated as economy class.	Section 65 -  Definitions   (105) "taxable service" means any 1[service provided or to be provided], (zzzo) to any passenger, by an aircraft operator, in relation to scheduled or non-scheduled air transport of such passenger embarking in India for domestic journey or international journey;"	In view of expanded service explanation are no longer required. Definition has become simple.
[(77c) "passenger" means any person boarding, at any customs airport, an aircraft for performing an international journey, but does not include - (i) a person who has arrived at such customs airport from a place outside India and is in transit through India, provided that he does not pass through immigration and does not leave customs area and continues his journey to a place outside India; and (ii) a person employed or engaged by the aircraft operator in any capacity on board the aircraft;]		No change is proposed. It seems that a change is desirable. or The clause (77c) can be deleted altogether. Because 'passenger' can be given a natural and contextual meaning. However, so long this meaning is existing, it will clash with nature of service.

There should be careful drafting and if necessary some changes can be made in proposed provisions in bill before enactment as Act. We can recall the time when honorable Shri P.Chitambar was Finance Minister. We find that during his tenure, many such defects pointed out in articles were taken care of however, many were not corrected - that means the legislative intention was as per the words used in the bill. However, subsequently retrospective amendments were made/ are proposed. To avoid retrospective amendments, it is desirable that more care should be taken and draftsmen should also have an eye on articles being published or webhosted. If any lacunae comes to notice, the same should be rectified.