ST - Levy of Development fee has been struck down by Apex Court as not being service - no service tax payable - from May, 2012 what has been collected as ST has been paid - prima facie case - stay granted: CESTAT
By TIOL News Service
MUMBAI, DEC 03, 2014: THE applicants are responsible for managing the entire operations of CSI Airport at Mumbai. Apart from other charges the applicant charges development fee @ Rs.100/- from the departing domestic passenger and Rs.600/- from the passenger travelling abroad. The fee charged by the applicants is for the development of the airport in future. As the development fee charged by the applicants is in nature of service to be provided, therefore, the Revenue was of the view that on these development fees, the applicant is required to pay service tax under the category of “Airport services".
Various SCNs were issued for the period April 2009 to February 2013 to the applicant demanding service tax and they were all confirmed along with interest and penalties by the CST, Mumbai.
The applicant is before the CESTAT seeking a stay from the recovery of the adjudged dues.
It is submitted that the development fee collected by them were not in the nature of service as held by the Apex Court in the case of Consumer Online Foundation & Ors vs. UOI inasmuch as the collection of development fee from the passengers was struck down by the Apex Court holding that the fees being in the nature of a tax and it is not a service, therefore, the applicants are not required to collect the fee. Furthermore, the Tribunal, on the same issue, in the case of Cochin International Airport Ltd. vs. CCE - 2007-TIOL-1189-CESTAT-BANG, held that no service tax is leviable on the development fee and this decision is affirmed by the Kerala High Court - 2009-TIOL-710-HC-KERALA-ST. It is also submitted that till May 2012 the applicant has not collected any service tax from the airlines on account of development fee chargeable from the passengers and, therefore, they have not paid any service tax for the said period. From 01 May 2012 upto February 2013 the applicant has collected Development Fee and service tax on the fee collected has been paid to the Revenue; an affidavit certifying that the applicant has not made any provision for the development fee in the Escrow Account maintained by them is also submitted.
Unperturbed by what was submitted by the applicant, the AR cited the apex court decision in Bharat Sanchar Nigam Ltd. - 2006-TIOL-15-SC-CT-LB and submitted that since the applicants themselves had taken the plea before the Apex Court that the development fee is on account of service provided for using airport, therefore, they are required to pay service tax.
The Bench observed -
“7. Levy of development fee has been struck down by the Hon'ble Supreme Court holding that the applicant is not entitled to collect the development fee from the passengers through airlines in the case of Consumer Online Foundation (supra). Therefore, it is not a service and the same view has been taken by this Tribunal in the case of Cochin International Airport Ltd. (supra) which has been affirmed by the Hon'ble Kerala High Court. Further, as argued by the learned Spl. Counsel that intention of the parties has to be seen as they have collected the development fee as service to be provided in future. We have seen the intention of the parties and gone through the records placed before us. On the basis of the records, we find that from May 2012 onwards the applicants have charged tax on these development fees from the airlines and whatever service tax collected by them has been paid to the department….”
Holding that the applicant has made out a prima facie case the CESTAT waived the requirement of pre-deposit of the entire amount adjudged and stayed recovery.
In passing : Also see 2013-TIOL-1487-CESTAT-MUM.
(See 2014-TIOL-2431-CESTAT-MUM)
