Airport development fee treated as statutory levy, not service consideration, so service tax was not chargeable.

Development fee collected from airport passengers was treated as a statutory levy under Section 22A of the Airports Authority of India Act, 1994, intended for future airport development and not as consideration for any passenger service. On that basis, the collection did not fall within the taxable service under Section 65(105)(zzm) of the Finance Act, 1994, because a compulsory public levy is distinct from a charge for services rendered. Service tax was therefore not chargeable on the development fee, and the consequential demand, interest, and penalties could not survive.

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Issues: Whether service tax was leviable on the development fee collected from passengers at the airport.

Analysis: The levy was examined in the light of the statutory framework governing airport services and the nature of development fee under Section 22A of the Airports Authority of India Act, 1994. The fee was treated as a statutory levy collected for future development and not as consideration for any service rendered to passengers. Applying the settled distinction between a charge for a service and a compulsory levy imposed for a public purpose, the collection was found not to fall within the taxable service contemplated by Section 65(105)(zzm) of the Finance Act, 1994.

Conclusion: Service tax was not chargeable on development fee, and the demand, interest, and penalties could not survive.

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