Air transport of such passenger embarking in India for domestic journey or international journey - Taxable Services - As appliable on or before 30-6-2012 - Service Tax

Transport of passenger embarking in India for international journey by air (w.e.f. 1-5-2006 international journey) (w.e.f. 1.7.2010 domestic journey) What is taxable - 65(105)(zzzo) Any service provided or to be provided 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;"; Who is the receiver of service Any passenger Who is the provider of service Any aircraft operator Who is liable to pay service tax Any aircraft operator who is providing services Meaning of Aircraft Operator - 65(3b) "aircraft operator" means any person who provides the service of transport of goods or passengers by aircraft; Meaning of CustomsAirport - 65(35a) "customs airport" means an airport appointed as such under clause (a) of sub- section (1) of section 7 of the Customs Act, 1962; Meaning of Passenger - 65(77c) "passenger" means any person boarding an aircraft in India for performing domestic journey or international journey. Meaning of International journey - 65(56a) "international journey" in relation to a passenger, means his journey from any customs airport on board any aircraft to a place outside India; ************************* Notifications: 1. Not. No. 25/2010 ST dated 22-6-2010 - Services provided to Person in transit from abroad destined to outside India or to an employee by an aircraft operator exempted from service tax 2. Not No. 26/2010 ST dated 22-6-2010 - Maximum service tax shall be Rs. 100 in case of domestic air journey (all class) and Rs. 500 in case of international air journey (economy class) (With a cap of 10% of Gross Value of Tickets) 3. Not. No. 27/2010 ST dated 22-6-2010 - Exemption for passengers embarking on a journey originating or terminating in an airport located in the state of Arunachal Pradesh or Assam or Manipur or Meghalaya or Mizoram or Nagaland or Sikkim or Tripura or at Baghdogra located in West Bengal Circulars 1 Circular No. D.O.F.NO.334/4/2006-TRU dated 28-02-2006 - Clarification 2. Circular No 96/7/2007 dated 23/8/2007 - Master Circular 3. D.O.F. No.334/1/2010-TRU - dated - 26.02.2010 [Changes proposed in service tax law and procedure in Union Budget 2010-11 - regarding] ************************* Notes: 1. Section 65(105)(zzzo) has been substituted vide Finance Act, 2010 with effect from 1.7.2010, prior to substitution it was read as, "[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;]" 2. The meaning of passenger u/s 65(77c) has been substituted vide Finance Act, 2010 with effect from 1.7.2010, prior to substitution it was read as, "["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;]" ************************* Comments: A. As per Paragraph No 6. of Circular No. 96/7/2007 dated 23/8/2007 states that :- "6. This circular supersedes all circulars, clarifications and communications, other than Orders issued under section 37B of the Central Excise Act, 1944 (as made applicable to service tax by section 83 of the Finance Act, 1994), issued from time to time by the CBEC, DG (Service Tax) and various field formations on all technical issues including the scope and classification of taxable services, valuation of taxable services, export of services, services received from outside India, scope of exemptions and all other matters on levy of service tax. With the issue of this circular, all earlier clarifications issued on technical issues relating to service tax stand withdrawn." B. Further Circular No 96/7/2007 dated 23/8/2007 clarifies that :- Issue - 086.01 / 23.08.07 An international journey commencing from an Indian airport involves stopover / transfer at intermediate airports outside India before reaching the destination (say Mumbai-Dubai-London-New York). Whether service tax would be liable in such case on the value indicated in the ticket for the entire journey or only on that part of the value attributable to the first sector (Mumbai-Dubai) of the journey? Clarification Aim of the passenger is to travel from Mumbai to New York. Actual destination of the international journey is the criterion to decide the value of the service (in this case, New York). Stopover / transfer at intermediate airports, being merely incidental and part of the main journey, is of no relevance or consequence for levy of service tax under section 65(105)(zzzo) read with section 66. Service tax in such cases is leviable on the total consideration of a single composite service relating to the entire journey. i.e., value indicated on the ticket for the entire journey. Issue - 086.02 / 23.08.07 An international journey (say Delhi-Mumbai-London) includes travel in a domestic sector (Delhi - Mumbai) as part of the international journey. Whether service tax is liable on the value of whole journey or after excluding the value attributable to the domestic sector from the total value of the ticket? Clarification In this case, the journey is a single composite journey. The aim of the passenger is to travel from India to a place outside India. Part of the travel in the domestic sector cannot be segregated from the single journey. Service tax is, therefore, leviable on the total value of the ticket treating the domestic sector as integral part of the international journey without excluding the value attributable, if any, to travel in the domestic sector. Issue - 086.03 / 23.08.07 An international journey commences from an airport outside India and completed at an airport outside India but including a sector wherein the passenger disembarks and subsequently embarks at an Indian airport as part of international journey (say Sydney-Mumbai-Dubai-Singapore-Sydney). Whether service tax is liable for Mumbai-Dubai sector only or on the total value of the ticket? Clarification In this case, the journey being a single one and the aim of the passenger is not to travel from India to a place outside India, service tax is not leviable under section 65(105)(zzzo). Issue - 086.04 / 23.08.07 Whether ticket issued outside India for an international journey commencing from India (say Delhi-London) is liable to service tax? Clarification Service tax is payable by the service provider, namely aircraft operator, for the taxable service provided. Place of purchase/ issue of ticket is of no relevance or consequence to determine the levy of service tax under section 65(105)(zzzo) read with section 66. Service tax is leviable as long as the passenger embarks in India for an international journey, in any class other than economy class. Issue - 086.05 / 23.08.07 Whether service tax is liable on the total value of the ticket or only half the value of the ticket in the case of round trip / return ticket (say Delhi-London-Delhi)? Clarification Service tax is leviable on the total value of the ticket.