Statutory passenger levies excluded from air transport tax base; disputed admin fee required factual verification before taxation.

Amounts collected from passengers as statutory levies and shown separately on the ticket were excluded from the taxable assessable value where the valuation rule or exemption notification so provided. Passenger Service Fee and Airport Tax, collected under the relevant air transport and airport law framework and separately disclosed, were therefore treated as not includible in the assessable value. A separate Admin fee could not be taxed without first verifying whether it was actually collected and, if so, its nature and purpose. The dispute on that charge was remanded for factual examination, and the associated interest and penalties did not survive for the set-aside part.

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Issues: (i) Whether Passenger Service Fee and Airport Tax collected from passengers were includible in the assessable value of the air passenger transportation service. (ii) Whether the alleged Admin fee could be subjected to service tax without verification of its actual collection and purpose.

Issue (i): Whether Passenger Service Fee and Airport Tax collected from passengers were includible in the assessable value of the air passenger transportation service.

Analysis: The valuation rule excluded taxes levied by Government on a passenger travelling by air when shown separately on the ticket or invoice. The record showed that Airport Tax was collected under the Airports Authority of India Act, 1994, and Passenger Service Fee was collected under the Aircraft Rules, 1937. These amounts were shown separately on tickets and, for the relevant period, were covered by the valuation exclusion and the exemption notification relied upon by the appellant.

Conclusion: Passenger Service Fee and Airport Tax were held to be not includible in the assessable value, in favour of the assessee.

Issue (ii): Whether the alleged Admin fee could be subjected to service tax without verification of its actual collection and purpose.

Analysis: The existence of any Admin fee collection was disputed as a matter of fact. The proper course was to verify whether such amount was in fact collected and, if collected, the nature for which it was charged and whether service tax was leviable under the law applicable during the relevant period.

Conclusion: The issue of Admin fee was remanded for verification, and no final taxability finding was recorded on merits.

Final Conclusion: The demand was set aside insofar as Passenger Service Fee and Airport Tax were concerned, while the dispute regarding Admin fee was sent back for factual examination, with the consequential interest and penalties not surviving in the set-aside part.

Ratio Decidendi: Amounts collected from passengers as statutory levies and shown separately on the ticket are excluded from the taxable assessable value where the governing valuation rule or exemption notification so provides; any separate charge alleged to be taxable must first be established on facts before liability can be determined.

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