Refusing to grant any relief to the Airports Authority of India, the Supreme Court recently ruled that the exclusion of handling of export cargo from the definition of ‘Cargo Handling Service’ under Section 65(23) of the Finance Act, 1994, does not exempt it from being taxed as taxable service under Section 66, read with sub-clause (zzm) of 65(105) of the Finance Act 1994.
The Two-Judge Bench comprising Justice Pankaj Mithal and Justice Prasanna B Varale observed that the services provided by the Airports Authority in any airport, including those related to export cargo, are taxable under the broad definition of “taxable service” as per the relevant provisions, and the inclusion of sub-clause (zzm) of Section 65(105) of the Finance Act with effect from September 10, 2004 makes all services provided by the Airports Authority at airports chargeable to service tax, irrespective of the cargo’s export status.
To examine whether the services rendered by the Appellant at the airport in handling the export cargo are exempted from service tax, the Bench referred to Section 66 of the Finance Act, which envisages levying of “Service Tax” at the rate of twelve per cent of the value of “taxable services”, as referred to in the sub-clauses therein, including subclause (zzm) of Sub-section (105) of Section 65 of the Finance Act.
Initially, only three types of services were referred to in the sub-clauses and were chargeable to service tax, but with the efflux of time, the services chargeable to service tax were increased, and a large number of other services were added to it. The Bench also noted that “Taxable services” are defined under Sub-section (105) of Section 65 of the Act to mean any services provided or to be provided to various persons, including those falling under sub-clause (zzm), i.e., service provided to any person by the Airports Authority or by any other person, in any airport or a civil enclave.
Thus, the Bench concluded that said sub-clause (zzm) is wide enough to cover any kind of service provided to any person by the Airport Authorities in any airport or a civil enclave. Therefore, whatever services are provided by the Airport Authority in any airport falls under “taxable service” in view of sub-clause (zzm).
Briefly, in this case, the Appellant (Airports Authority of India) is a Government of India organization engaged in managing airports and providing services related to cargo handling, including export cargo. It was registered with the Service Tax Department and was charged service tax for the period Oct 01, 2003, to March 31, 2007, under the categories of “Storage and Warehousing Service” and “Airport Services”. Since the service tax was confirmed by the Commissioner for the period up to September 09, 2004, under the former category and from September 10, 2004, under the latter, the Appellant challenged the service tax liability, asserting that services related to handling export cargo were excluded from the definition of taxable services.
Appearances:
AOR Amrendra Kumar Mehta, along with Advocates Y K Kapur and Bhushan Kapur, for the Appellant/ Taxpayer
AOR Gurmeet Singh Makker, for the Respondent/ Revenue
