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TMI Blog2016 (4) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... ot being contested, the demand on the inclusion of passenger fee charges in the value of the services along with the penalty are set aside. - Appeal disposed of - Service Tax Appeal No. 929 of 2009 - Final Order No . 51234/2016 - Dated:- 31-3-2016 - MS ARCHANA WADHWA, MEMBER (JUDICIAL) AND MR. B RAVICHANDRAN, MEMBER (TECHNICAL) For the Petitioner : Shri Tarun Jain, Advocate For the Respondent : Shri Sanjay Jain, DR ORDER PER MS. ARCHANA WADHWA : The appellant is engaged in providing services of transport of passenger by air embarking in India for international journey by air service and were duly registered with service tax department. With the introduction of service tax on said category of services with effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be included in the assessable value of their services, thus requiring them to pay service tax on the same. Learned advocate submits that as they have already paid the service tax in respect of other two allegations, he has no instruction to contest the same and only contest in respect of two components is relatable only to penalty and it is the third component of passenger service fee which is being contested by them. 4. After hearing the learned DR, we find that the fact of payment of service tax on basic fare as also the fact of subsequent payment of service tax along with interest on two components of fuel surcharge and administrative surcharge is not in dispute. We find that admittedly the things were not clear during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntinental Airlines Inc vs. CST, New Delhi [2015-TIOL-1481-CESTAT-DEL] and by rejecting the Revenues stand that the air port tax (which are equivalent to passenger service fee) were collected as part of the gross amount received for the service rendered and as such, should be includable in the assessable value, it was held that such airport tax which are being collected by the airlines is on behalf of the airport and were paid to the air port and as such cannot be held includible in the assessable value. For arriving at the above finding, Tribunal took note of the precedent decision in the case of Turkish Airlines vs. CST, Delhi [2012-TIOL-110-CESTAT-DEL] which took note of the earlier interim order passed in the case of other airlines simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. For better appreciation, the relevant para is reproduced as under:- 10. The contention of the petitioner that Rule 5(1) of the Rules, in as much as it provides that all expenditure or costs incurred by the service provider in the course of providing the taxable service shall be treated as consideration for the taxable service and shall be included in the value for the purpose of charging service tax goes beyond the mandate of Section 67 merits acceptance. Section 67 as it stood both before 1-5-2006 and after has been set out hereinabove. This section quantifies the charge of service tax provided in Section 66, which is the charging section. Section 67, both before and after 1-5-2006 authorises the determination of the value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ruling that Rule 5(1) which provides for inclusion of the expenditure or costs incurred by the service provider in the course of providing the taxable service in the value for the purpose of charging service tax is ultra vires Section 66 and 67 and travels much beyond the scope of those sections. To that extent it has to be struck down as bad in law. The expenditure or costs incurred by the service provider in the course of providing the taxable service can never be considered as the gross amount charged by the service provider for such service provided by him. The illustration 3 given below the Rule amplifies what is meant by sub-rule (1). In the illustration given, the architect who renders the service incurs expenses such as telephon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 23(5) by the Act of 1956. Nor is there any other enactment which interdicts such taxation. It is true that section 3 is the general charging section. Even if section 23(5) provides for the machinery for collection and recovery of the tax, once the legislature has, in clear terms, indicated that the income of the firm can be taxed in accordance with the Finance Act of 1956 as also the income in the hands of the partners, the distinction between a charging and a machinery section is of no consequence. Both the sections have to be read together and construed harmoniously. It is significant that similar provisions have also been enacted in the Act of 1961. Sections 182 and 183 correspond substantially to section 23(5) except that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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