Passenger service fee and airport taxes excluded from taxable value for air transport service tax demand

Fuel surcharge, administrative charge, passenger services fee and airport taxes were considered for inclusion in the assessable value for service tax on air passenger transport services. CESTAT New Delhi noted that earlier Tribunal rulings, including in the assessee's own matter and other airline cases, had consistently treated passenger service fee and airport taxes as statutory or airport-related charges outside the consideration for passenger transport. It also accepted that taxing the same amount again in the airline's hands could amount to double taxation where service tax attributable to PSF had already been remitted through the airport authority mechanism. On that basis, the impugned demand was held unsustainable and exclusion of the disputed charges from taxable value was upheld.

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Issues: Whether fuel surcharge, administrative charge, passenger services fee and airport taxes were includible in the assessable value for levy of service tax on air passenger transport services.

Analysis: The dispute was treated as already settled by earlier Tribunal decisions, including in the assessee's own case and in other airline matters. The Tribunal noted the consistent view that passenger service fee and airport taxes are statutory levies or airport-related charges and do not form part of the consideration for transport of passengers by air. It also accepted that taxing the same amount again in the hands of the airline could lead to double taxation, particularly where the service tax attributable to PSF had already been remitted through the airport authority mechanism.

Conclusion: The impugned demand was unsustainable. The exclusion of the disputed charges from the taxable value was upheld and the appeal was allowed.

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