TaxTMI 
TaxTMI 
2013 (11) TMI 44
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....zed by the Government of India w.e.f. 1.4.2009 and the Ministry of Civil Aviation vide letter dated 27.2.2009 had conveyed the approval of the Central Government under Section 22A of the AAI Act, 1994 for levy of DF at Mumbai Airport @ Rs.100/- per departing domestic passenger and Rs.600/- per departing International passenger w.e.f. 1.4.2009. However, the appellant did not discharge any Service Tax liability on the said DF on the ground that the purpose of collection of DF is funding and financing the cost of up-gradation, expansion or development of the airport and the appellant does not have any obligation to provide any services to the passengers from whom the DF is collected. They were also of the view that the DF collection is a mode of capital funding for the project and in the absence of rendering any service, no Service Tax is liable to be paid. However, the department was of the view that the appellant was allowed to collect DF on the condition that such receipts are treated as capital receipts for the future expansion of the airport. Therefore, the consideration received as fees from the departing passengers are in relation to taxable services rendered to them or to be r....
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....es specified under Section 22A of the said Act and, therefore, no Service Tax is payable on such collection of tax. (ii) In the case of Commissioner of Central Excise, Cochin Vs. Cochin International Airport Ltd.- 2009 (16) STR 401 (Ker), the Hon'ble High Court of Kerala held that the User Fee collected by the Airport Authority is not liable to Service Tax as the same is not for rendering any services but for enhancing the revenue of the airport. The SLP filed by the Revenue against the order of the Kerala High Court was also dismissed by the Supreme Court. (iii) Since the Development Fee is a tax levied and collected from the passenger, it cannot form part of the value of consideration of a taxable service. The Hon'ble Apex Court in the case of India Cement Ltd. Vs. State of Tamil Nadu- AIR 1990 SC 85, Orissa cement Ltd. Vs. State of Orissa & Ors.- AIR 1991 SC 1676, State of Orissa & Ors. Vs. Mahanadi Coalfield Ltd. - AIR 1995 SC 1868 had held that levy of tax on a tax is illegal and bad in law. Since the DF is a tax, Service Tax cannot be levied of the said tax. (iv) The Revenue had made a reference to the Ministry of Law & Justice,....
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....and the Airport Authority of India and the Central Government has supervisory powers in respect of the said escrow account to ensure that money is spent only for the specified purposes. MIAL has clarified that DF collected by them has been utilized for the construction of the following assets, namely, Runway, Taxiways, Air field ground lighting, New Integrated Terminal, Terminal IC at Mumbai Airport and Air Traffic Control Power. (ii) As per Section 65(105(zzm) taxable service means any service provided or to be provided to any person by Airport Authority or any other person, in any airport or civil enclave" and the terms service provider" shall be construed accordingly. Therefore, any service provided in any airport or civil enclave is treated as a taxable service and the scope of airport service is very wide. The definition of taxable service in relation to Airport Service does not provide any condition to any provision of service in relation to any particular activity and this is a major difference in the definition of the Airport Services as compared to the other definitions provided in the Finance Act. (iii) The Hon'ble High Court of New Zealand....
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....t a legally collected tax inasmuch as rules were not made for the collection of the same and, therefore, the levy and collection of DF was ultra vires of the AAI Act, 1994. Inasmuch as the DF is not a legally collected tax, it loses the nature of a tax. (vi) It is further argued that from the escrow account opened by MIAL with the bank, it can be seen that they were aware of their liability to pay service tax in as much as they had maintained a separate account known as DF Escrow - ST Account 9706" and in the said account, Service Tax was required to be deposited. The said Service Tax was on the DF collected by them. Thus, at the time of collecting the said DF the intention of the appellant was to charge the Service Tax. (vii) As regards the contention of the appellant that the Law Ministry and the Solicitor General of India have opined that the Service Tax is not leviable on the DF, these are independent view and the adjudicating authority is not bound by these opinions. The Ministry in its instruction vide letter F. No. 106/Commr(ST)/2009 dated 8.7.2011 has clearly held that DF is chargeable to Service Tax. In the light of the above, it is praye....
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....ontract between the Airports Authority or the lesse to whom the airport has been leased out and the third party, such as the airlines, passengers, visitors and traders doing business at the airport. But there can be no such contractual relationship between the passengers embarking at an airport and the Airports Authority with regard to the up-gradation, expansion or development of the airport which is to be funded or financed by development fees as provided in clause (a) of Section 22A. Those passengers who embark at the airport after the airport is upgraded, expanded or developed will only avail the facilities and services of the upgraded, expanded and developed airport. Similarly, there can be no contractual relationship between the Airports Authority and passengers embarking at an airport for establishment of a new airport in lieu of the existing airport or establishment of a private airport in lieu of the existing airport or establishment of a private airport in lieu of the existing airport as mentioned in Clauses (b) and (c) of Section 22Aof the 1994 Act. In the absence of such contractual relationship, the liability of the embarking passengers to pay reason Section22A has bee....
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....n collected, the Airport Authority at these places were allowed to retain the DF levied and collected and to utilize the same for the specific purpose mentioned under Section 22A of the AAI Act, 1994 and to account for the same to Airport Authority of India. 5.3 Section22A gives the power to levy DF at airports and reads as follows: [22A. Power of Authority to levy development fees at airports:- The Authority may, [22A. Power of Authority to levy development fees at airports .- The Authority may, (i) after the previous approval of the Central Government in this behalf, levy on, and collect from the embarking passengers at an airport, other than the major airports referred to in clause (h0 of Section 2 of the Airports Economic Regulatory Authority of India Act, 2008 the development fees at the rate as may be prescribed (ii) levy on, and collect from, the embarking passengers at major airports referred to in clause (h) of Section of the Airports Economic Regulatory Authority of India Act, 2008 the development fees at the rate as may be determined under clause (b) of sub-section (1) of Section 13 of the Airports Econom....
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....at when goods cannot be taxed directly, it cannot be permitted to be taxed indirectly. Though this decision pertain to excise duty on computer software, the ratio of this decision applies equally well in respect of Service Tax also. In a service tax matter relating to technical testing and analysis services in the case of Commissioner of Central Excise vs. Dr. Lal Path Lab (I) Ltd. decided on 14-9-2007, the Hon'ble Punjab & Haryana High Court held that what is specifically kept out of levy by the Legislature under one entry cannot be subjected to tax by the Revenue under another entry. 5.6 The learned Adjudicating authority has placed reliance on the decision of the Hon'ble High Court of New Zealand in the case of Rotorua Regional Airport Ltd. vs. Commissioner of Inland Revenue. In the said case, the question before the Hon'ble High Court was whether Goods and Service Tax is leviable on USD5 levied on passengers departing from the airport. In that case departing passengers were required to make payment of DF at a specific counter at the airport and were given an adhesive ticket to attach to their boarding pass. Section 6(1) of the GST Act of New Zealand defined the taxable activ....
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....e broad resemblance to another case is not at all decisive.'' **** **** **** **** Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it." 5.8 Service tax in India prior to 2012 was selective in scope of levy and all activities were not taxed, but only taxable services as defined in law were liable to tax. Even when 'Airport Service' was introduced, a service which was not a taxable service, was not liable to Service Tax under the 'Airport Service' if the said service performed outside the Airport or Civil Enclave was not taxable. A Circular issued by the CBE&C in this regard clarifies this position. Circular dated 17.9.2004 as regards Airport service clarified as follows:- Airport services: Services provided in an airport or civil enclave, to any person by Airports Authority of India (AAI), a person authorized by it, or any other person having charge of management of an airport are taxable under this ....
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....w.e.f. 1.7.2010. If that be so, the said activity could not have been taxed under the 'Airport Service' at all. 5.10 A similar issue came up for consideration as to whether Service Tax is leviable on the Toll or User Charges or Access Fee paid by the road users. The CBE&C vide Circular NO. 152/3/2012-Service Tax dated 22.2.2012 clarified that Service Tax is not leviable on Toll paid by the users of roads and the said Circular is reproduced below:- Subject : Toll in the nature of 'user charge' or 'access fee' paid by roads users - regarding. A representation has been received by the Board, seeking clarification regarding leviability of service tax on toll fee (hereinafter referred as 'toll') paid by users, for using the roads. The representation has been examined. 2. Service tax is not leviable on toll paid by the users of roads, including those roads constructed by a Special Purpose Vehicle (SPV) created under an agreement between National Highway Authority of India (NHAI) or a State Authority and the concessionaire (Public Private Partnership Model, Build-Own/Operate-Transfer arrangement). 'Tolls' is a matter enumerated (serial number 59) in L....