TaxTMI 
TaxTMI 
2026 (2) TMI 912
X X X X Extracts X X X X
X X X X Extracts X X X X
....t consultant Service, Manpower Recruitment Agency Services etc. With effect from 10.09.2004, sub clause (zzm) was added to clause (105) of section 65 of the Finance Act, 1994 wherein any service provided to any person in an airport or a civil enclave by the appellant, Airport Authority of India or any person authorized by it, was brought within the definition of "taxable service" and accordingly such services became taxable. During an enquiry by the DGCEI Officers, the appellant vide their letter dated 28.03.2005 requested the jurisdictional Assistant Commissioner. Service Tax, that the assessment of Service Tax for the period from 10.09.2004 to 31.03.2005 may be considered to be provisional in terms of Rule 6(4) of the Service Tux Rules, 1994 and that for subsequent period, the assessment may be done on provisional basis. On the basis of this letter, the Assistant Commissioner vide letter dated 29.03.2005 directed the appellant to pay Service Tax on provisional basis under Rule 6(4) of Service Tax Rules 1994 for the month of March, 2005 subject to certain conditions as specified in the letter. Accordingly, the appellant started paying Service Tax on provisional basis and paid some....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation. Learned counsel contended that the Principal Commissioner had erred in holding that the activities of the route navigational facility are provided exclusively from the airport and its civil enclaves, whereas the activities were not manned from the Airport and its Civil Enclaves. In fact, the learned counsel submitted that there was no material on record to hold that the said facilities were provided from the airport. Further, the costs units were based at the Airports/ its civil enclaves whereas the Principal Commissioner had failed to appreciate that it is the activity which attracts the Tax and not the cost unit etc. The Principal Commissioner of Service Tax had also not made any spot enquiry for verification of the source of the activity to determine the liability as required under the directions of the CESTAT. 3.2 Learned counsel further contended that the Principal Commissioner had erred in holding that the miscellaneous income of the appellant is subjected to service tax. He stated the Principal Commissioner of the Service Tax failed to appreciate that profit on sale of Fixed Assets, Interest on Staff Advances, Sale of scrap were not exigible to Service Tax. Learned....
X X X X Extracts X X X X
X X X X Extracts X X X X
....idelines for valuation are as follows:- Valuation of taxable services for charging Service tax (1) Service tax chargeable on any taxable service with reference to its value shall,- (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money, with the addition of service tax charged, is equivalent to the consideration; (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. (2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the question of limitation, the commissioner has to give his clear findings on the point as to whether the assessments for the period from 10.09.04 to Feb. 05 can be treated as provisional assessment and if the assessments for this period cannot be treated as provisional, whether the demand for this period is within the normal limitation period. 28. The impugned order with regard to the portion of service tax demand which has not been challenged in these appeals and which was not the subject matter of dispute remain undisturbed. 29. The appeals filed by the Appellant and the respondent and the miscellaneous applications filed by the Interveners stand disposed of as above." 10. We will consider each issue separately:- (a) Service Tax on RNFC & TNLC- In this context, we note that the Tribunal in its order has held as follows:- "21.3 After considering the rival submissions on this point, we are of the view that as held above in para 17.1, the service of Navigational Aid to the overflying Aircrafts or to the Aircrafts which intend to land at a particular Airports/Civil Enclave can be treated as provided in the Airports/Civil Enclave only if this ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... held to be exigible to service tax. The Principal Commissioner in her order has held as follows:- "11.5. To comply with the directions of the Hon'ble Tribunal and ascertain the taxability of the issue. M/s AAI were requested vide letters dated 29.02.2016. 14.03.2016 and 22.03.2016 to confirm whether the persons for manning the navigation towers located out of the Airport/Civil Enclave were managed entirely by the personnel posted out of the Airport Civil Enclave. They were also requested to provide the cost incurred for providing Raute Navigation Facility (RNF) and Terminal Navigation Landing Facility (TNF) out the Airport/Civil Enclave and the cost incurred within Airport/Civil Enclave separately during the relevant period. M/s AAI vide their letter dated 31.03.2016 informed that the En-route Aeronautical Communication Stations which provide communication Navigation and Surveillance facilities were normally managed by separate set of personnel posted at this particular station but they did not provide any documentary evidence in support of their contention. Further M/s AAI also informed vide their aforesaid letter that no separate cost was computed/ maintained for RN....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o produce any evidence that the service of RNFC was provided by the appellant throughout the route. Hence, the adjudicating authority has concluded that the entire service was provided only within the airport/civil enclave, and went ahead to confirm the demand. In order to appreciate the submissions, one would need to understand what RNF charges are. A perusal of the term reveals that the RNFC covers communication, navigation, and surveillance services provided while an aircraft is flying through Indian airspace. These charges are levied on both domestic and international flights, including overflying flights (flights passing through Indian airspace without landing). The said charges are typically calculated based on a formula considering the maximum all-up weight (MTOW) of the aircraft and the distance covered. We also note that as per the Ministry of Civil Aviation, the AAI has to provide the following: "1.1.3 Scope To provide facilities for safe and efficient operations of aircraft within the air space of the country, the Authority levies RNFC, TNLC, LPH and cargo related charges on aircraft handled at the airports. RNFC charges are also recovered from aircraft....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m RNFC, we are of the opinion, from its very definition that this service is provided from the airport/civil enclave exclusively. It has also been submitted before us that the appellant does not charge it separately, and a gross amount is charged from the airlines. In this context, we note that the AAI on its website has given a chart indicating the TNLC charges per aircraft. The same is reproduced hereinafter: 13.2 From the above table it is evident that the charges are as per each aircraft of an airline. From the terminology of the said charge, it is self-evident that this service is being provided to assist the aircrafts in landing, and such service is being provided within the airport/civil enclave. Consequently, we hold that these charges are exigible to service tax. We draw support from the Supreme Court's judgement in the Airport of Authority of India versus Commissioner of Service Tax in Civil Appeal No. 17405 of 2017 dated 23.09.2025 wherein the Apex Court held:- "14. The aforesaid sub-clause (zzm) is wide enough to cover any kind of service provided to any person by the Airport Authorities in any airport or a civil enclave. Therefore, whatever services are pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e impugned order has held as follows:- "10. I observe that the Show Cause Notice was issued to AAI on 18.07.2006 by ADG. DGCER Mumbai demanding a total Service tax of Rs. 308,44,21,797/- and about Rs. 53035 Crores in respect of Traffic Revenue collected and non-traffic Revenue received respectively for the period from 10.09.2004 to 31.03.2006 along with interest. A corrigendum dated 19.09.2006 was also issued elaborating that the amount of service tax included cess. I find that AAI had requested for provisional assessment for the period 10.09.2004 to 31.03.2005. The jurisdictional Assistant Commissioner, service tax vide letter dated 29.03.2005 directed AAI to pay service tax on provisional basis under Rule 6(4) of Service Tax Rules, 1994 for the month of March 2005 subject to certain conditions as specified in the letter. I also note that the aforesaid letter of the jurisdictional Assistant Commissioner, Service Tax categorically conveys that "you are permitted to pay service tax on provisional basis under Rule 6(4) of the Service Tax Rules, 2002 read with Rule 7 of the Central Excise Rules (no. 2) 2002 for the month of March 2005 only, subject to the following conditions....
X X X X Extracts X X X X
X X X X Extracts X X X X
....versus Commissioner of CGST, Dehradun (supra). However, we find that the Patna High Court in its judgement in M/s Sukhmani Carrying Corporation vs. The Principal Commissioner, CGST, Patna and ors. [Civil Writ Case No. 6483 of 2024 dated 02.05.2024] held that the relevant date under Section 73 is generally the date of filing the periodical return or the date prescribed for filing such returns as specified in Rule 7 of the Service Tax Rules, 1994. In the instant case, we note that the appellant had filed the ST-3 returns on 26.07.2005 and thereafter revised the same on 02.03.2006. The show cause notice dated 18.07.2006 was issued within the period of one year and is within limitation. Consequently, we hold that the show cause notice was issued within the normal limitation period. 18. In view of the above discussions, we hold as follows:- (i) The demand on RNFC is set-aside. (ii) The demand in respect of TNLC is upheld and the same is remanded only for quantification of the demand. (iii) The demand of service tax on Miscellaneous Income is set-aside. (iv) The show cause notice was issued in the normal limitation period. 19. The impugned order ....