TURKISH AIRLINES Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) THE appellant M/s. Turkish Airlines are engaged in the business of operating airlines and providing the services of "transportation of passengers embarking in India for International journey by air" along with other services to its clients. While issuing tickets to the passengers, they were collecting Passenger Service Fees (PSF) on behalf of the International Airport Authority of India (IAAI) and remitting it to IAAI. Similarly, they were also collecting airport taxes. The airport taxes are collected from passengers for utilizing the airport for arrival and departure and this amount is also paid to the International Airport Authority of India. They had not included these amounts collected from the passengers, in the value of their services and paid service tax because it was not part of the value of services rendered by them. Revenue was of the view that without the service extended by International Airport Authority of India for landing and taking off and also for facility provided by IAAI to the passengers, the appellants could not have rendered their services of transportation of passengers by air and therefore, these charges levied from the passengers should form part of value of services rendered by the appellants. The period of dispute is from 1 -5 -2006 to 31 -8 -2007. The impugned order has confirmed demand for service tax with interest and penalties on the said ground for the said period. The Counsel for the appellants submits that PSF are collected by them on behalf of IAAI to reduce the point of contact of the passengers with different agencies cannot be considered as value of services rendered by the appellants. They point out, that Revenue has not made out a case that they have collected charges more than what was remitted to IAAI. In the case of Airport Taxes, their contention is that this is statutory levy which does not form part of their revenue.

(2.) The Learned AR for the Revenue submits that any payment made by the passengers to the airlines in relation to service rendered to the passengers should be considered as a part of the value of service and in this case, there is no dispute that passenger service fees and airport taxes have been collected by the appellants from the passengers. According to him, the fact that these amounts were collected and remitted to some other agency cannot alter the position.

(3.) WE have considered the arguments of both sides.