IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 9TH JULY 2009 / 18TH ASHADHA 1931 C.E.Appeal.No. 16 of 2008() --------------------------- AGAINST THE ORDER DATED 16/05/2007 IN ST/- 254-256/2006 of CUSTOMS,EXCISE&SERVICE TAX APP.TRIBUNAL,BANGALORE .................... APPELLANT: -------------------- THE COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, C.R.BUILDINGS, I.S. PRESS ROAD, COCHIN-682018. BY ADV. SRI.JOHN VARGHESE,SC,CEN.BOARD OF EXCIS RESPONDENT(S): --------------- M/S.COCHIN INTERNATIONAL AIRPORT LTD. NEDUMBASSERY, KOCHI AIRPORT PO.683111 ERNAKULAM. ADV. SRI.M.PATHROSE MATTHAI, SENIOR ADVOCATE FOR R1 SRI.SAJI VARGHESE FOR R1 SMT.MARIAM MATHAI FOR R1 SRI.P.THOMAS GEEVERGHESE FOR R1 THIS CENTRAL EXICISE APPEAL HAVING BEEN FINALLY HEARD ON 09/07/2009, ALONG WITH CEA NO.24 OF 2008,CEA NO.19 OF 2008 & CEA NO.30 OF 2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.R. C.N.RAMACHANDRAN NAIR & C.K.ABDUL REHIM, JJ. .................................................................... C.E. Appeal Nos.16, 19, 24 & 30 of 2008 .................................................................... Dated this the 9th day of July, 2009. JUDGMENT Ramachandran Nair, J. The connected appeals are filed by the Commissioner of Central Excise against the orders of the Tribunal holding that respondent is not liable to pay service tax on “user's fee” collected at the rate of Rs.500/- from every outgoing international passenger. When the appeals were taken up, counsel for the respondent submitted that the appeals are delayed and contended that by virtue of decision of the Supreme Court in COMMISSIONER OF CUSTOMS & CENTRAL EXCISE V. HONGO INDIA(P) LTD. reported in 2009(5) SCC 791, the High Court has no power to condone delay in the appeal filed under Section 35G of the Central Excise Act. However, Standing Counsel Sri.John Varghese appearing for the appellants contended that the judgment of the Supreme Court is got over through the amendment now proposed with retrospective effect granting authority to the High Court to 2 condone delay in filing appeal, if the High Court is of the view that there is reasonable ground for the delay. However, we do not think we should consider this issue because after hearing the case on merits we felt that the appeals deserve to be only dismissed for the following reasons. 2. Admittedly the amount collected which is subject matter of levy is the “users fee” collected by the Airport at the rate of Rs.500/- for every outgoing international passenger. Neither domestic passengers nor international passengers reaching the Airport from any foreign destination is liable to pay users fee. The demand of service tax is under Section 65(105)(zzm) which is as follows: “S.65(105) “taxable service” means any service provided or to be provided:- ........... (zzm) to any person, by airports authority or any person authorised by it, in an airport or a civil enclave.” Counsel for the appellants referred to definition of “airports authority” contained in sub-section (3d) of Section 65 and contended that a private airport owned and managed by the respondent is also covered 3 by the definition. The definition clause reads as follows: “S.65(3d) “airports authority” means the Airports Authority of India constituted under section 3 of the Airports Authority of India Act, 1994(55 of 1994) and also includes any person having the charge of management of an airport or a civil enclave.” On going through the above provision, we are of the view that if the levy is permissible, then respondent certainly would be liable because by virtue of the inclusive definition respondent-company owning and managing the Airport answers the description of Airports Authority. The next question to be considered is whether respondent is liable for service tax on the users fee collected from outgoing international passengers. As already noted, no users fee is collected from any domestic passenger or any international passenger landing at the Airport from a foreign destination. The amount charged is a flat figure of Rs.500/- from every outgoing international passenger. The respondent's case that the amount collected is not for any service rendered is obvious because services rendered to passengers are almost similar in nature and there is no reason why international passengers arriving from foreign destinations are exonerated. Further, domestic 4 terminal of the Airport provides almost same services. However, no users fee is collected from any passenger traveling in the domestic sector. The Tribunal has referred to the decision taken by the Board of Directors of the respondent-company in their meeting on 27.3.2000 when they decided to collect users development fee “for enhancing the revenue of the Airport to cope up with the expenditure and debt servicing". It is clear from the decision of the Board of Directors of the company that purpose is to augment revenue for the Airport and is not towards consideration for any service rendered to the outgoing international passenger. Admittedly all passengers leaving the Airport and arriving from outside India receive the same services and if any service is to be charged, the same must be charged on all. Further, ground handling services in the Airport are rendered by Air India and the traffic and other operational matters are handled by Airport Authority. The Tribunal noticed that for the specific services rendered by these agencies, service tax is also collected and remitted by them. Even though Airport is also rendering services to the passengers like restaurants, Air conditioning, facility for foreign exchange transactions 5 by allowing Branches of Banks and other dealers to operate, duty free shop for incoming and outgoing passengers to purchase articles etc., service tax can be demanded for such services only when Airport collects service charge for any of the services rendered by them. A Single Judge of this court in the judgment reported in a batch case namely, O.P. No.13451/1996 and connected cases held that similar fee collected by the Kozhikode Airport Authority is without any justification. Even though appeal was filed against the said judgment before the Division Bench, we are told that the Calicut Airport discontinued collection of users fee. Following this, the respondent also has stopped collection of users fee. The facts and circumstances of the case and the evidence clearly prove beyond doubt that the users fee collected is only for enhancing the revenue of the Airport and not for any service rendered to outgoing international passengers. Section 67 defining value of taxable services for charging service tax says that the value of service shall be gross amount charged by the service provider for the service provided to the recipient. Since collection of users fee is not for any specific service rendered by them, but is a flat rate of 6 charge to one category of passengers namely, outgoing international passengers, it cannot be said that the amount so collected is by way of service charge. We, therefore, hold that the Tribunal rightly held that no service tax is payable for the users fee collected by the respondent. The appeals are accordingly dismissed. C.N.RAMACHANDRAN NAIR Judge C.K.ABDUL REHIM Judge pms