Statutory levies on air passengers shown separately on tickets are excluded from service tax value, with no tax on those amounts.

Passenger Service Fee and Airport Tax collected by an airline were excluded from the assessable value for service tax on air passenger transportation because both amounts were statutory levies, collected under the relevant aviation laws, remitted to the authorities on an actual basis, and shown separately on the ticket. For the post-27.02.2010 period, Rule 6(2)(v) of the Service Tax (Determination of Value) Rules, 2006 specifically excluded taxes levied by any Government on passengers travelling by air when separately indicated. The exemption notification was also consistent with exclusion of such statutory levies from taxable value, so service tax was not payable on those amounts.

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Issues: Whether Passenger Service Fee and Airport Tax collected by the airline were includible in the assessable value for levy of service tax on transportation of passengers by air.

Analysis: The charge for Airport Tax was collected under Section 22 of the Airports Authority of India Act, 1994, and Passenger Service Fee was collected under Rule 88 of the Aircraft Rules, 1937. The amounts were remitted to the concerned authorities on actual basis and were shown separately on the tickets. For the post-27.02.2010 period, Rule 6(2)(v) of the Service Tax (Determination of Value) Rules, 2006 excluded taxes levied by any Government on passengers travelling by air when shown separately on the ticket or invoice. The exemption notification also supported exclusion of such statutory levies from taxable value.

Conclusion: Passenger Service Fee and Airport Tax were not includible in the assessable value, and service tax was not payable on those amounts.

Ratio Decidendi: Statutory levies collected from air passengers and shown separately on the ticket are excluded from the taxable value for service tax purposes.

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