Passenger service fee and airport taxes excluded from airline taxable value to avoid double taxation under passenger air transport service.

Passenger service fee and airport taxes collected by an airline were held not to form part of the taxable value for service tax on transport of passengers by air. The Tribunal treated passenger service fee as a statutory levy linked to airport facilities under the Airports Authority of India Act, 1994, and noted that the levy was attributable to airport services rather than the airline's own taxable service. It further held that including the same amounts in the airline's assessable value would amount to double taxation, particularly where service tax on the passenger service fee had already been remitted by the Airport Authority. The demand was therefore unsustainable.

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Issues: Whether passenger service fee and airport taxes collected by an airline form part of the taxable value for service tax under transport of passengers by air service.

Analysis: The Tribunal followed its earlier decisions on the same question and held that passenger service fee is a statutory levy connected with airport facilities under the Airports Authority of India Act, 1994. It noted that the amount is collected as part of the ticket but the levy is attributable to airport services, and the same amount cannot again be included in the airline's taxable value for transport of passengers by air service. The Tribunal also observed that inclusion of the same amount at the hands of the airline would lead to double taxation, particularly when service tax on the passenger service fee had already been remitted by the Airport Authority.

Conclusion: Passenger service fee and airport taxes are not includible in the taxable value of the airline for service tax purposes under transport of passengers by air service, and the demand was unsustainable.

Ratio Decidendi: Amounts collected as passenger service fee and airport taxes, being statutory levies relatable to airport services and already subjected to tax at the appropriate level, do not form part of the assessable value of an airline's transport of passengers by air service.

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