2017 (9) TMI 715 - AT - Service Tax

Tribunal excludes Passenger Service Fee and Airport Tax from taxable service value

The Tribunal ruled in favor of the appellant, holding that Passenger Service Fee (PSF) and Airport Tax were not includable in the assessable value of the ... Valuation - includibility - PSF - Airport charges - whether PSF and Airport charges collected by the appellant are to be included in the service provided by them under the category of Transportation of Passengers by Air services or not? - Held that: - the appellant has complied with the condition of Rule 6 of Service Tax (Determination of Value) Rules, 2006 and the same are not includable in the assessable value of service provided by the appellant, as the impugned period is, post 27.02.2010 - the said issue has been examined by this Tribunal in the appellant's own case, wherein this Tribunal has made it clear that these charges are not to be included in the assessable value of the services provided by the appellant Moreover, as per the exemption N/N. 12/2010 dated 12.02.2010, statutory taxes charged by any government on Air passengers would be excluded from the taxable value for the purpose of levy of tax and therefore, the service tax is not payable by the appellant. Passenger Service Fee (PFS) and Airport Tax are not includable in the assessable value of the services provided by them - appeal allowed - decided in favor of appellant. Issues involved:1. Whether Passenger Service Fee (PSF) and Airport charges collected by the appellant are to be included in the service provided by them under the category of Transportation of Passengers by Air services.2. Whether the impugned order demanding service tax for the period January 2011 to December 2011, along with interest and penalties, is sustainable.3. Whether the impugned order is contrary to the statutory provisions, specifically Rule 6 of the Service Tax (Determination of Value) Rules, 2006.Analysis:Issue 1:The appellant contested the demand of service tax on the grounds that PSF and Airport Tax should not be included in the taxable service value. The appellant relied on various precedents where similar charges were deemed not liable for service tax. The Tribunal analyzed the evidence presented by the appellant and concluded that the charges were collected on behalf of the Airport Authority without any mark-up, thus not forming part of the taxable service value. The Tribunal also referred to Rule 6 of the Service Tax (Determination of Value) Rules, 2006, which excludes taxes levied by the government on passengers if shown separately on the ticket. Since the charges were shown separately on tickets and collected in accordance with relevant regulations, the Tribunal held that they were not includable in the assessable value of the services provided by the appellant.Issue 2:The appellant argued that the impugned order was contrary to previous Tribunal decisions and statutory provisions. The Tribunal considered the arguments presented by both sides, including the reliance on a previous case involving Air Canada. However, the Tribunal found that the appellant failed to provide sufficient documentary evidence to support their claim that the charges should not be included in the taxable value. Based on the lack of evidence and failure to establish crucial facts, the Tribunal dismissed the appeal, emphasizing the importance of proving the exclusion of charges based on specific conditions and contractual obligations.Issue 3:The appellant contended that the impugned order was in conflict with Rule 6 of the Service Tax (Determination of Value) Rules, 2006. The Tribunal examined the legal provisions related to the collection of Airport Tax and PSF, noting that these charges were collected and shown separately on tickets as required by the regulations. The Tribunal's analysis of the relevant rules and exemptions led to the conclusion that the charges were not to be included in the assessable value of the services provided by the appellant. Consequently, the Tribunal set aside the impugned order and allowed the appeal with consequential relief.In conclusion, the Tribunal ruled in favor of the appellant, holding that Passenger Service Fee (PSF) and Airport Tax were not includable in the assessable value of the services provided by them, based on the compliance with relevant regulations and exemptions. The impugned order demanding service tax for the specified period was set aside, emphasizing the exclusion of these charges from the taxable service value.