AIRPORT SERVICE

CESTAT BANGALORE BENCH

P.C. Poulose

v.

Commissioner of Customs & Central Excise (Appeals), Cochin

DR. S.L. PEERAN, JUDICIAL MEMBER

AND T.K. JAYARAMAN, TECHNICAL MEMBER

FINAL ORDER NO. 50/2008

APPEAL NO. ST/MISC./328/2006 IN

ST/259/2006

January 17, 2008

Section 65 of the Finance Act, 1994 - Airport service - In terms of a contract between assessee and Airport Authority of India, assessee was authorized to collect entrance fee from visitors for entering lounge and availing various facilities - Lower authorities considering services rendered by assessee amounted to airport service demanded service tax alongwith interest and penalty - Whether just because assessee was authorized to collect fee and remit it to Airport Authority of India it could not be said that service was provided by assessee - Held, yes - Whether liability rests only with AAI who was actually providing services - Held, yes - Whether therefore, there was no merit in demand - Held, yes

FACTS

The appellant-assessee was engaged in the activity of collecting ‘Airport Admission Ticket Charges’ on account of a licence issued by the Airport Authority of India. The revenue proceeded against the assessee on the ground that he was providing amenities and facilities to the passengers and the services rendered by him amounted to airport services and was liable to pay the service tax. The original authority confirmed demand, alongwith interest and penalty. The Commissioner (Appeals) upheld the order of the original authority.

On appeal:

HELD

On a very careful consideration of the issue, it was found that in terms of a contract between the assessee and the Airport Authority of India (AAI), the assessee was authorized to collect entrance fee from the visitors for entering the lounge and availing the various facilities. Just because the assessee was authorized to collect the fee and remit it to the AAI, it could not be said that the service was provided by the assessee. Assessee was only collecting agent and whatever was collected after giving the licence fee he retained it. In this case, the actual liability was only rests with the AAI. In terms of the agreement, AAI may ask the assessee to collect the service tax also. But ultimately the liability rests only with the AAI who was actually providing the services. A person who simply collects the entrance fee cannot be equated with the service provider. Therefore, there was no merit in the demand in respect of the assessee and also there was no justification for imposition of any penalty, especially when the airport authority directed him not to collect any service tax until the clarification was received from the Board. Therefore, no merit was found in the impugned order of the lower authority which had been upheld by the Commissioner (Appeals). Therefore, the appeal was to be allowed.