Separate passenger service fee and airport taxes are excluded from air transport service tax value when collected on behalf of airport authorities.

Passenger Service Fee and airport taxes collected by airlines are not includible in the taxable value of air passenger transport where they are collected separately and merely passed on under the airport charge regime. The valuation rules exclude separately shown taxes levied on air passengers, and the record showed that these amounts were collected on behalf of the airport authorities rather than forming part of the airline's own service consideration. The same view had already been taken in the appellant's earlier case, and the service tax demand could not survive.

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Issues: Whether Passenger Service Fee and airport taxes collected by airlines are includible in the taxable value of transport of passengers by air service for levy of service tax.

Analysis: The liability turned on whether the amounts collected under the heads of Passenger Service Fee and airport taxes were collected merely on behalf of the airport authorities and were shown separately on the ticket, so as to fall outside the taxable value under the valuation rules. The applicable valuation framework excluded separately shown taxes levied by Government on air passengers, and the record also showed that the charges were collected under the statutory regime governing airport charges and passenger service fee. In the appellant's own earlier case, the same view had been taken that such amounts were not part of the assessable value.

Conclusion: Passenger Service Fee and airport taxes are not includible in the assessable value of the services provided by the appellant; the demand could not survive.

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