Service tax on Tpt of passanger

[sunil jain]

As per exemtion list vide item no. 23 in notification  no. 25/2012, dt 20th June, 2012,  Transport of passengers by air embarking from or terminating in an airport located in the NE states is a exempted service.

In case aircraft is provided on wet lease for use  of PASSANGER SERVICE only between two NE states,whether lease rent charged would qualify for this exeption. In my view this should be exemped as aircraft use ifor eligible purpose.

 

Thanks,

 

CA. R.K. Aggarwal

[JAMES PG]

Lease income towards supply of tangible goods is chargeable to Service Tax even prior to 1.07.12. So long as NE States is not covered under non-taxable territory, it is subject to ST. Exemption is restricted to the  air lines on the air fare collected from the passengers

[CASeetharaman KC]

As per my understanding the exemption covers the service of transportation of passengers only. I beleive that the intention here is to give relief to air passengers travelling to and from North East destinations   Here the subject matter is "Wet lease" which comprises the hiring of an aircraft along with the crew. This service would therefore be subject to service tax

[YAGAY and SUN]

Yes, there is an exemption available to 'Seven Sisters' i.e. N.E. States in this regard despite of wet lease or dry lease.

AI Summary

Exemption for passenger air transport to Northeast: wet lease charges may be taxable rather than covered by the exemption.
Whether exemption for transport of passengers by air under item 23 of Notification No. 25/2012 extends to lease rent for an aircraft provided on wet lease between North East States; one position limits exemption to airline passenger fares and treats lease income as taxable, while an alternate position contends the exemption covers wet or dry leases when the aircraft is used exclusively for eligible passenger transport.