Passenger service fee and airport tax excluded from service tax value when separately shown on airline tickets.

Passenger service fee and airport tax charged to air passengers are excluded from the assessable value for service tax when they are shown separately on the ticket or invoice. Rule 6(2)(v) of the Service Tax (Determination of Value) Rules, 2006 excludes taxes levied by a Government on a passenger travelling by air, and the analysis treats airport tax under the Airport Authority of India Act, 1994 and passenger service fee under the Aircraft Rules, 1937 as separately recoverable statutory charges. The stated conclusion is that both amounts are not includible in the taxable value for service tax computation.

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Issues: Whether passenger service fee and airport tax collected from passengers are includible in the assessable value for computation of service tax.

Analysis: The exclusion under Rule 6(2)(v) of the Service Tax (Determination of Value) Rules, 2006 applies where taxes levied by any Government on a passenger travelling by air are shown separately on the ticket or invoice. Airport tax was collected under Section 22 of the Airport Authority of India Act, 1994, and passenger service fee was charged under Rule 88 of the Aircraft Rules, 1937. Both amounts were shown separately on the tickets, and the exemption notification relied upon by the Tribunal also supported exclusion of statutory taxes charged on air passengers from taxable value.

Conclusion: Passenger service fee and airport tax are not includible in the assessable value for computation of service tax.

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