Collecting agent not liable as service provider for airport charges; service tax demand and penalty set aside.

A person authorised only to collect airport admission charges and remit the balance after retaining a licence fee was not the service provider for service tax purposes, because the underlying airport facilities were rendered by the Airport Authority of India. On that basis, the levy could not be sustained against the collecting agent, and penalty was also unwarranted, particularly where he had been directed not to collect service tax until clarification was received from the Board. The demand, penalty, and consequential levy were therefore set aside in favour of the assessee.

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Issues: Whether a person merely authorised to collect airport admission charges can be treated as the service provider for levy of service tax, and whether penalty and interest could be sustained against him.

Analysis: The arrangement showed that the appellant was only authorised to collect entrance charges for the Airport Authority of India and remit the amounts after retaining the agreed licence fee. Mere collection of charges did not make the appellant the provider of the underlying airport facilities. The real liability for service tax lay on the authority actually rendering the services. In the circumstances, the levy against the appellant could not be sustained, and penalty was also unwarranted, particularly when the appellant had been directed not to collect service tax until clarification was received from the Board.

Conclusion: The demand, penalty, and consequential levy against the appellant were set aside, and the appeal was allowed in favour of the assessee.

Ratio Decidendi: A person acting only as a collecting agent for entrance charges cannot be treated as the service provider for service tax purposes where the underlying service is rendered by another entity.

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