2019 (1) TMI 979 - AT - Service Tax

Tribunal rules Development Fee at IGI Airport not subject to service tax

DELHI INTERNATIONAL AIRPORT LIMITED Versus CGST-DELHI III

The Tribunal held that the Development Fee (DF) collected by the appellant at IGI Airport was not subject to service tax as it was a statutory levy for ... Levy of service tax - Development Fee collected by the appellant, from the passengers at IGI Airport - scope of ‘airport’ - Held that:- An identical issue has been dealt with by the co-ordinate bench of Mumbai Tribunal in the case of Mumbai International Airport P. Ltd. Vs Commr. Of ST-I, Mumbai [2016 (8) TMI 1054 - CESTAT MUMBAI], where it was held that Since collection of development fee is not for any specific service rendered by them, but is a flat rate of charge to passengers, it cannot be said that the amount so collected is by way of service charge - the ratio of the said judgment squarely covers the case in hand. The service tax is not chargeable on Development Fee - appeal allowed - decided in favor of appellant. Issues Involved:1. Whether service tax was rightly levied on the 'Development Fee' collected by the appellant from passengers at IGI Airport.Issue-wise Detailed Analysis:1. Levy of Service Tax on Development Fee:The core issue in this appeal is the legitimacy of levying service tax on the 'Development Fee' (DF) collected by the appellant from passengers at IGI Airport. The appellant, Delhi International Airport Limited, challenged the Order-In-Original passed by the Commissioner of Service Tax, which confirmed a demand of Rs. 262,06,24,787/- under the proviso to Section 73(1) of the Finance Act, 1994. The appellant had already deposited Rs. 130,17,48,797/- under protest, which was appropriated by the adjudicating authority along with the imposition of interest under Section 75 and penalties under Sections 78 and 76 of the Finance Act, 1994.2. Nature of Development Fee:The appellant argued that the DF, approved by the Central Government under Section 22A of the Airports Authority of India (AAI) Act, 1994, was a statutory levy to fund public purposes, not towards the rendition of any service. The DF was collected to bridge the funding gap for the airport's development project, and thus, it should not be subject to service tax.3. Legal Precedents and Definitions:The appellant relied on the definition of 'airport' in Section 65(3c) and the taxable service in Section 65(105)(zzm) of the Finance Act, 1994, arguing that the taxable activity could not be said to have occurred since the collections were intended for future developments. They cited the Supreme Court decision in Consumer Online Foundation & Others v. Union of India, which held that such statutory levies, being in the nature of cess or tax, were not liable to taxation. Other cases cited included Mumbai International Airport P. Ltd. Vs Commr. Of ST-I, Mumbai, Cochin International Airport Ltd. v. Commissioner of Central Excise & Customs, Kochi, and Commissioner of Central Excise v. Cochin International Airport Ltd.4. Revenue's Argument:The Revenue contended that the DF collected did not constitute a tax and that both the appellant and the passengers did not consider it a tax during transactions. Thus, the levy should be treated as a charge for services rendered.5. Tribunal's Findings:The Tribunal referred to the Mumbai Tribunal's decision in Mumbai International Airport P. Ltd. Vs Commr. Of ST-I, Mumbai, which clarified that the DF was not linked to the provision of service and hence not liable to service tax. The Tribunal noted that the DF was a levy for future establishment, not for services rendered. The Supreme Court in Consumer Online Foundation had directed that the DF amounts collected should be used only for the purposes intended in Section 22A of the AAI Act.6. Conclusion:The Tribunal concluded that the DF was not a consideration for any service rendered and thus not subject to service tax. The impugned order was found unsustainable in law and was set aside, granting consequential relief to the appellant.Judgment:The appeal was allowed, and the order pronounced in the open court on 18/01/2019.