Statutory passenger levies collected separately on tickets were excluded from service tax value under valuation rules and exemption notification.

Passenger Service Fee and airport tax collected by airlines were treated as statutory levies, collected under the Airport Authority of India Act, 1994 and the Aircraft Rules, 1937, and shown separately on tickets. On that basis, Rule 6 of the Service Tax (Determination of Value) Rules, 2006 and Notification No. 12/2010 excluded such government-imposed passenger charges from the taxable value. The amounts were therefore not includable in the assessable value, and service tax was not payable on them.

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Issues: Whether Passenger Service Fee and other taxes collected by the airlines were includable in the taxable value for levy of service tax.

Analysis: The charges in question were statutory collections: airport tax was collected under Section 22 of the Airport Authority of India Act, 1994, and Passenger Service Fee was collected under Rule 88 of the Aircraft Rules, 1937. The amounts were separately shown on the tickets. In view of Rule 6 of the Service Tax (Determination of Value) Rules, 2006 and Notification No. 12/2010 dated 12/02/2010, statutory taxes charged by the Government on air passengers were not part of the taxable value.

Conclusion: The amounts were not includable in the assessable value and service tax was not payable on them.

Ratio Decidendi: Statutory levies collected separately and shown on the ticket are excluded from the taxable value for service tax where the valuation rules and exemption notification so provide.

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