Vide Finance Bill, 2010 provisions of Section 65(105)(zzzo) are proposed to be amendment with a view to levy service tax on passengers embarking in India for Domestic or International journey. The definition of passenger is provided in Section 65(77c) of the Finance Act, 1994 means any person boarding an aircraft from CustomsAirport for undertaking an international journey. It is stated that unless provisions of Section 65(77c) are also amended to include passengers undertaking domestic journey, tax cannot be levied on the basis of amendment in Section 65(105)(zzzo) of the Act. It appears to be a lapse while drafting the Finance Bill, 2010.

Courtesy

Anuj Bansal

 

 

Service tax on air passengers may be ineffective unless the statutory definition of 'passenger' is amended to cover domestic travel. An amendment proposes levying service tax on persons embarking in India for domestic or international air travel, but the current statutory definition of passenger applies only to international journeys; therefore, without broadening that definition to include domestic travellers, the proposed tax cannot be validly imposed on domestic passengers.