2019 (1) TMI 979 – CESTAT NEW DELHI – TMI – Levy of service tax – Development Fee collected by the appellant, from the passengers at IGI Airport – scope of ‘airport’ – Held that:- An identical issue has been dealt with by the co-ordinate bench of Mumbai Tribunal in the case of Mumbai International Airport P. Ltd. Vs Commr. Of ST-I, Mumbai [2016 (8) TMI 1054 – CESTAT MUMBAI], where it was held that Since collection of development fee is not for any specific service rendered by them, but is a flat rate of charge to passengers, it cannot be said that the amount so collected is by way of service charge – the ratio of the said judgment squarely covers the case in hand.
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The service tax is not chargeable on Development Fee – appeal allowed – decided in favor of appellant. – Appeal No. ST/52815/2016-CUS [DB] – FINAL ORDER NO. 50064/2019 – Dated:- 18-1-2019 – Shri Anil Choudhary, Member (Judicial) And Shri C.L. Mahar, Member (Technical) Shri Somesh Arora, A.S. Hasija, Advocate for the A
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e dated 21.10.2014 issued vide F. No DL-II/ST/R-XI/SCN/DIAL/29/2011/1262 for ₹ 85,80,22,610/- Total ₹ 262,06,24,787/- 3. The appellant is a company incorporated under the provisions of Companies Act, 1956 and is registered with Service Tax Department vide Registration No. AACCD3570FST001. They entered in Agreement with Airports Authority of India, for Operation, Management and Development Agreement (OMDA) dated 4th April, 2006, to undertake some of its functions namely, operating, maintaining, developing, designing, constructing, upgrading, modernizing, financing and managing IGI Airport and to perform services and activities constituting Aeronautical and Non-Aeronautical services (excluding the Reserved Activities) at the IGI Airport. 4. As per the OMDA the appellant has been granted the exclusive right in respect of IGI Airport inter alia to develop, finance, design, construct, modernize, operate, maintain, use and regulate the use by third parties of the airport and to e
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be collected from the passengers at the IGI Airport, are (a) Passenger Service Fee under Rule 88 of Aircraft Rules, 1937 and (b) Development Fee (in short DF) under Section 22A of the Airports Authority of India Act, 1994. 6. The Central Government vide Letter No. AV.24011/002/2008-AD dated 09.02.2009 conveyed their approval under Section 22A of the AAI Act, for levy of DF by the appellant at the IGI Airport @ ₹ 200/- per departing domestic passenger and @ ₹ 1300/- per departing international passenger purely on ad hoc basis. The ad hoc approval granted was subject to submission of final project cost estimates. The said approval; for levy of DF was allowed based on appellant s request to bridge funding gap of the project cost through DF. The appellant vide its letter dated 09.03.2009 intimated the Commissioner of Service Tax, New Delhi that levy of DF is in the nature of statutory levy to fund a public purpose and not towards rendition of any service per se. That the DF is
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tion 65(105)(zzm) is the existing airport. Drawing attention to the decision of the Hon ble Supreme Court in Consumer Online Foundation & Others v. Union of India [(2011) 5 SCC 360] it was claimed that such statutory levies being in the nature of cess or tax, was not liable to taxation. The following cases were also relied upon i. Mumbai International Airport P. Ltd. Vs Commr. Of ST-I, Mumbai-2017 (51) STR 280 (Tri-Mumbai) ii. Cochin International Airport Ltd. v. Commissioner of Central Excise & Customs, Kochi-2007 (7) STR 468 (Tri-Bang) iii. Commissioner of Central Excise v. Cochin International Airport Ltd-2009 (16) STR 401 (Ker) 10. Learned DR supported the impugned order contending that in the impugned order the appellant as well as the passengers did not entertain the idea that they were collecting or paying a tax when transacting in the development fee and thereby seeking to counter the plea on behalf of the appellant, that this levy should have the status of a tax. 11. W
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his relationship is enshrined in the ticket, which provides access to the airport, process through check-in and security, space for waiting and necessary amenities and provision for boarding an aircraft. There is no assertion in the impugned proceedings that the passenger is required to effect payment for any of these activities. These facilities were available without any additional charge before the imposition of development fee and continue to be available after its quashing. No additional benefit accrued to the passenger during the period of levy of development fee. These are basic facilities that is inherent in the civil aviation sector in which the appellant, a non-public sector entity, is a recent entrant. 10.Civil aviation sector in India was, for long, under the monopoly of the Government of India with carriage effected by two corporations established by Acts of Parliament and the ground facilities under the control of the Ministry of Civil Aviation. Air carriage was de-nation
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n the State exchequer could not be eliminated and hence appropriate types of levies as well as restrictions on their utilization were incorporated in the statute. To be noted in particular was the control imposed on the collections that do not relate to commercial operations. The provisions of Sections 22 and 22A of the Airports Authority of India Act, 1994 should be viewed in the specific context of substitution of the constitutional funds of the Government of India for deposit and drawal with that of the accounts of the Authority. 12.Section 22 of the Act enables the airport authority to charge users of its facilities. We have noted supra that this provision was never invoked for passengers and payments were restricted to and only upon exercise of option to procure food and non-food articles from licencees situated in the airport premises. On the other hand, the levy under Section 22A of the Act did not afford the privilege of exercise of an option by the passenger and enforced, with
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Online Foundation (supra) makes it abundantly clear that development fee is a levy for a future establishment. This reinforces our conclusion that there are no services being rendered for which this levy is being charged. 14.It is the contention of the Learned Authorized Representative that with the striking down of this levy in the case of the appellant, the amounts so collected do not require to be utilized in a manner prescribed in the Act and, hence, should be deemed to be collection for commercial purpose. We cannot agree with this contention because the Hon ble Supreme Court in the very same decision has directed that the amount so collected should necessarily be used only for the purpose intended in Section 22A of the Act. In that context, the attempt by Revenue to cite intention of the two parties by reference to Bharat Sanchar Nigam Ltd. supra as germane to delinking it from tax is rendered irrelevant. 15.The decision of the Tribunal in Cochin International Airport Ltd. v. Co
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y is without any justification. Even though appeal was filed against the said judgment before the Division Bench, we are told that the Calicut Airport discontinued collection of users fee. Following this, the respondent also has stopped collection of users fee. The facts and circumstances of the case and the evidence clearly prove beyond doubt that the users fee collected is only for enhancing the revenue of the Airport and not for any service rendered to outgoing international passengers. Section 67 defining value of taxable services for charging service tax says that the value of service shall be gross amount charged by the service provider for the service provided to the recipient. Since collection of users fee is not for any specific service rendered by them, but is a flat rate of charge to one category of passengers namely, outgoing international passengers, it cannot be said that the amount so collected is by way of service charge. We, therefore, hold that the Tribunal rightly he
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