Airlines not Liable to pay Service Tax on Passenger Service Fees and Other Taxes Collected from Passengers as part of Consideration: CESTAT [Read Order]

While setting aside the impugned order of Revenue against M/s China Eastern Airlines, Delhi bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that Airlines not liable to pay service tax on passenger service fees and other taxes collected from passengers as part of the consideration.

The Appellant M/s China Eastern Airlines are providing services of Transport of Passengers and Goods by Air. The dispute in the case was with respect to department raised a demand on Passenger Service Fees (PSF) and other taxes (international taxes) collected by the airlines as part of the consideration when the tickets are issued to the passengers.

Aggrieved appellant challenged the order of Revenue by filing an appeal to this Tribunal. The bench comprising of President Justice (Dr.) Satish Chandra and Technical Member V. Padmanabhan heard the contentions raised by Assessee.

The bench heard the recitals and relied on the decision in the case of M/s Royal Jordanian Airlines & Ors. Vs. CST, Delhi where it has been held that 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.

In the light of the aforementioned case, the Tribunal held that passenger service fees and other taxes collected from passengers as part of consideration should not be brought to service tax.