Custom, Excise & Service Tax Tribunal
M/S. Lufthansa German Airlines vs Commissioner Of Central Excise & St, ... on 8 September, 2017
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SCO 147-148, SECTOR 17-C, CHANDIGARH 160 017 COURT NO. I Appeal No. ST/51515/2014-DB Date of Hearing : 22.06.2017 Date of Decision : 08.09.2017 [Arising out of Order-in-Original No. OIO-06-ST-SRB-2013-14 dated 29.11.2013 passed by the Commissioner Central Excise & ST, Delhi (Gurgaon)] For approval and signature: Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. Devender Singh, Member (Technical) M/s. Lufthansa German Airlines : Appellant vs. Commissioner of Central Excise & ST, Delhi (Gurgaon) : Respondent
Appearance:
Shri Tarun Jain, Advocate for the Appellant(s) Shri Satyapal, A.R. for the Respondent(s) CORAM:
Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. Devender Singh, Member (Technical) Final Order No. 61764 /2017 Per : Ashok Jindal The appellant is in appeal against the impugned order demanding service tax for the period January 2011 to December 2011 under the category of transportation of passengers by air services, along with interest and imposing various penalties under Finance Act, 1994.
2. The facts of the case are that appellant is an Airlines and engaged in transportation of passengers within India as well as outside India. As per the applicable regulations, the appellant collects Passenger Service Fee (PSF for short) from the passengers undertaking domestic journey and Airport Tax for the passengers undertaking international journey. The appellant collected PSF in terms of Rule 88 of the Air Craft Rules, 1937 read with the Ministry of Civil Aviation instructions permitting the Airport Authority to collect these charges. Airport taxes are levied by the respective authority of the country to which the international journey takes place. Both the PSF and Airport Tax collected by the appellant are remitted to the concerned authority on actual basis. Revenue is of the view PSF and Airport charges collected by the appellant are to be included in the value of taxable service on which the appellant is required to pay service tax. In view of this, show cause notice was issued and demand of service tax was confirmed by way of adjudication. Aggrieved from the said order, the appellant is before us.
3. Ld. Counsel for the appellant submits that the issue has already been decided in their favour by this Tribunal in the case of Continental Airlines vs. CST, New Delhi 2015-TIOL-1481-CESTAT-DEL wherein it has been held that PSF and Airport tax cannot be included for the purpose of determining the liability of service tax. Therefore, on this ground, impugned order is to be set-aside. He further submits that in their own case, reported as 2016-VIL-2014-CESTAT-DELHI, these charges are not to be considered for levy of service tax. He further submits that the Tribunal has held that the element of PSF and Airport Tax are not liable to service tax in the light of the decision in the case of Austrian Airlines vs. CST Final Order No. ST/A/53049/2016 dated 11.08.2016, United Airlines vs. CST, Delhi 2016-TIOL-2539-CESTAT-DEL, American Airlines vs. CST Delhi 2016 (45) STR 226 (Tri. Del.) and Austrian Airlines vs. CST, Delhi Final Order No. 56410/2016 dated 14.12.2016. He further submitted that the impugned order amounts to double levy of service tax which is not permitted. It is the contention that this Tribunal in the case of Airport Authority of India vs. CST 2015 (39) STR 35 (Tri.), has categorically declared that PSF is liable to service tax in the hands of the Airport authority and it is towards the services provided by it and therefore, service tax is not payable by the appellant. He further submitted that in the case of Airport Authority of India (supra) it has been submitted that PSF and Airport tax are Revenue of the airport authority and liable to tax in their hands, therefore the same cannot be again made liable in the hands of the appellant. Therefore, if the service tax is charged in the hands of appellant, it will amount to double tax on the same service. Therefore, the impugned order is to be set-aside on this ground itself.
4. He further submitted that the impugned order is contrary to the statutory provisions. It is his submission that as per Rule 6 (2) (v) of the Service Tax (Determination of Value) Rules, 2006 provide that these taxes are to be excluded while determining the service tax liability. Therefore, in terms of Rule 6 of the said Rules, demand is not sustainable. Consequently, impugned order is to be set-aside.
5. On the other hand, ld. AR relied upon the decision of the Tribunal in the case of Air Canada vs. CST, New Delhi Final Order No. 52137/2017 dated 01.03.2017 to say that these charges are includable in the assessable value of the service provided by the appellant.
6. Heard both sides and considered the submissions. We find that the short issue involved in the matter is that, whether PSF and Airport charges collected by the appellant are to be included in the service provided by them under the category of Transportation of Passengers by Air services or not. Ld. AR has heavily relied on the decision in the case of Air Canada vs. CST, New Delhi (supra). We find that in the case Air Canada, the period involved is May 2006 to September 2007 and the appellant has failed to give documentary evidence that they have shown these expenses separately or not. The same is extracted below:-
5. Ld. Counsel for the appellant submitted a part of Passenger Air Tariff, General Rules, 2010. It is submitted that this is the mandate for the members of IATA. The said compilation indicates country-wise taxes and fee to be paid by the Airlines. While we note that any amount collected from the passenger specifically identified for the particular service, to be rendered by other than the appellants, are not to be included in the gross value, it is necessary to establish with documentary evidence the background of such fee or taxes, legal term of contractual obligation to collect and pay the amount on actual basis. These documentary evidences are not forthcoming in the present appeal. Further, we also note that reliance placed by the appellant on the decided cases can be of help in the present case only when the facts are established. We also note that any claim for exclusion on the basis of acting as pure agent can be made only if all conditions for such concept are fulfilled. Similarly, it is seen that the present inclusion is not on the basis of provisions of Rule 5(1) of Service Tax (Determination of Value) Rules, 2006. The said rule mentions about expenditure or cost incurred by the service provider in the course of providing taxable service. In the present case, we are not dealing with any expenditure or cost incurred by the appellant in providing any service. Their claim is that these amounts (PSF and Airport taxes) are collected on behalf of the Airport Authority. In the absence of supporting evidence and also the crucial fact that the same is transmitted on actual basis without any mark up/tax element involved, has not been established in the present case. Here, we also note that the Tribunal in Continental Airlines Inc - 2015-TIOL-1481- CESTAT-DEL and a few other cases held that PSF and airport taxes are not includible in the taxable value of airlines. It was recorded that these charges were collected by the airlines on behalf of airports and were paid to them and, therefore, are not includible in the assessable value for the purpose of levy of service tax. Unless, these facts are established the ratio cannot be universally adopted for all airlines. As, already noted, categorical evidences are not forthcoming in the present appeal, in spite of specific query by the Bench.
6. Accordingly, we find that the appeal cannot be sustained due to failure to establish the facts. Accordingly, the same is dismissed.
7. The appellant is relying on Rule 6 of the Service Tax (Determination of Value) Rules, 2006, which has been amended with effect from 22.02.2010 which reads as under:-
Rule 6 . Cases in which the commission, costs, etc., will be included or excluded.
(2) Subject to the provisions contained in sub-Rule (1), the value of any taxable service, as the case may be, does not include-
(v) the taxes levied by any Government on any passenger travelling by air, if shown separately on the ticket, or the invoice for such ticket, issued to the passengers. We find that Airport Tax has been collected by the appellant as per Section 22 of Airport Authority of India Act, 1994 which empowers the authority to charge fees for the amenities given to the passengers and visitors at any Airport. Further, the PSF has been charged in terms of Aircraft Rules, 1937, wherein Rule 88 of the said Rules, authorise the licensee to collect fees to be called as Passenger Service Fee from the embarking passengers at such rates as the Central Government may specify, and is also liable to pay for security component to any Security Agency designated by the Central Government for providing the security service. We find that the said tax has been collected by the appellant and same has been shown separately on the tickets. Therefore, the appellant has complied with the condition of Rule 6 of Service Tax (Determination of Value) Rules, 2006 and the same are not includable in the assessable value of service provided by the appellant, as the impugned period is, post 27.02.2010 and the said issue has been examined by this Tribunal in the appellants own case wherein this Tribunal has made it clear that these charges are not to be included in the assessable value of the services provided by the appellant relying on the decision in the case of Continental Airlines vs. CST, New Delhi (supra). Moreover, as per the exemption Notification No. 12/2010 dated 12.02.2010, statutory taxes charged by any government on Air passengers would be excluded from the taxable value for the purpose of levy of tax and therefore, the service tax is not payable by the appellant.
8. In view of the above analysis, we hold that Passenger Service Fee (PFS) and Airport Tax are not includable in the assessable value of the services provided by them. Therefore, the impugned order deserves no merit, accordingly, the same is set-aside. Appeal is allowed with consequential relief.
(Order pronounced in the court on _08.09.2017 ) Devender Singh Member (Technical) Ashok Jindal Member (Judicial) KL 6 Appeal No. ST/51515/2014