The Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that no service tax is leviable on passenger service fee (PSF) and Airport Tax which are not includible in the assessable value of services.
Lufthansa German Airlines, the appellant assessee is related to the includability of passenger service fees and airport taxes collected from passengers.
The assessee appealed against the order passed by the adjudicating authority for confirming the demand for service tax and the imposition of penalty against the assessee.
Ashwini Chandrasekaran, the counsel for the assessee contended that the Passenger Service Fee (PFS) and Airport Tax are not includible in the assessable value of the services provided by them.
Nikhil Kumar Singh and Narinder Singh, the counsels for the department relied on the decisions made by the lower authorities and contended that the assessee was liable for the service tax on the PFS and the demand raised by the revenue was as per the law and liable to be sustained.
The Bench observed that in the case of Continental Airlines v. CST, the court held that the statutory taxes charged by any Government on Air passengers would be excluded from the taxable value for levy of tax and therefore, the service tax was not payable by the assessee.
The two-member bench comprising S.S Garg (Judicial) and Anjani Kumar (Technical) held that the passenger service fee and airport taxes collected from passengers were not includable in the assessable value for computation of service tax.
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