By TIOL News Service

MUMBAI, APR 21, 2016: THIS is a Revenue appeal.

The respondent provided the services of loading/unloading of cargo, aircraft cleaning, provision of ground service equipment and arranging for manning of ground transportation through trained personnel for this work. The respondent supplied manpower to M/s. Jet Airways (I) Pvt. Ltd. in the airport premises.

Respondent was issued a SCN by the DGCEI demanding service tax amounting to Rs.20,27,162/-. The adjudicating authority confirmed the demand of service tax; appropriated Rs.4,93,683/-, demanded interest and imposed penalties galore.

The Commissioner (Appeals) set aside the order and, therefore, Revenue is before the CESTAT.

The AR submitted that the respondent had admittedly provided the services within the premises of Airport which is under control of Airport Authority of India and, therefore, the services are squarely covered under the definition of "Airport Services".

The respondent submitted that the lower appellate authority had correctly held that the services are not covered under "Airport Services" as there was no authorization by the Airport Authority and that the definition was subsequently amended by the Finance Act, 2010 and the TRU had vide D.O.F. No. 334/1/2010-TRU dated 26-02-2010 clarified the matter in the following terms -

The definitions of the taxable services, namely the ‘Airport Services' [section 65(105) (zzm)], the ‘Port Services' [section 65 (105) (zn)] and the ‘Other Port Services' [section 65 (105) (zzl)] are being amended to provide that,-

(a) all services provided entirely within the airport/port premises would fall under these services; and

(b) an authorization from the airport/port authority would not be a pre-conditionfor taxing these services.

The Bench observed that the respondent was providing various services to M/s. Jet Airways (I) Pvt. Ltd. under a contract between both of them and the Airport Authority of India had no role whatsoever in this arrangement and that the services provided by the respondent were not authorized by Airport Authority of India.

Adverting to the definition of "Airport Services" contained in section 65(105)(zzm) and which reads -"Taxable Service" means any service provided to any person by Airport Authority or any person authorized by it, in an airport or civil enclave", the Bench further observed -

++ The terms ‘services provided to any person by any person who was authorized by Airport Authority' means the services which are otherwise to be undertaken by Airport Authority is outsourced by Airport Authority for provision of services in the airport shall be covered under "Airport Services", that means even a person is authorized to undertake the services in the airport, the service should be undertaken on behalf of Airport Authority. In the present case, the respondent is providing the services directly to M/s. Jet Airways (I) Pvt. Ltd. which is not on behalf of Airport Authority. The contract and terms thereof are decided by both i.e. by the respondent and M/s. Jet Airways (I) Pvt. Ltd., therefore it cannot be said that under this arrangement, Airport Authority has authorized the respondent to provide the services.

++ From the above explanation of D.O.F. 334/1/2010-TRU dated 26-02-2010, it became clear that prior to definition of "Airport Services" in the Finance Bill 2010, the services provided by any person in the airport by authorization of airport authority was covered under the definition of "Airport Services". However, subsequent to amendment the scope of airport services was enlarged and post amendment, service provided, whether it is by authorization or otherwise, covered under the definition of "Airport Services." This clarification makes it clear that prior to amendment, if a person provides the services in the airport, it must be authorized by airport authority, else the same will not be covered under airport services.

Concluding that the Commissioner (A) had correctly interpreted the definition of "Airport Services" and held that the services rendered by the respondent are not on behalf of the airport authority or authorized by airport authority so as to be charged to Service Tax during the material period under "Airport Services", the said order was upheld.

The Revenue appeal was dismissed.

(See 2016-TIOL-948-CESTAT-MUM)