Case Note & Summary
This appeal under Section 35L of the Central Excise Act, 1944 arose from a service tax demand confirmed by the Commissioner (Adjudication), Service Tax, Delhi and upheld by the Customs, Excise and Service Tax Appellate Tribunal. The appellant, Airports Authority of India, a Government of India organisation under the Ministry of Civil Aviation, was engaged in managing various airports in India and was registered with the Service Tax Department. In discharge of its duties, the appellant handled cargo at airports, including export cargo, involving activities such as unloading, carting, X-ray, export packing, and other services from the time cargo was accepted for shipment until it was placed on the aircraft. For the period 01.10.2003 to 31.03.2007, the Commissioner confirmed service tax liability upon the appellant, initially under the category of Storage and Warehousing Service up to 09.09.2004 and with effect from 10.09.2004 under the category of Airport Services. The CESTAT, by order dated 01.03.2017, confirmed the service tax liability under the category Airport Services with effect from 10.09.2004, leading to the present appeal by the assessee. The appellant argued that the services on which service tax was confirmed related to handling of export cargo and stood excluded under Section 65(23) of the Finance Act, 1994, read with the proviso, and therefore were not covered under the taxable service as defined under Section 65(105) of the Act. The revenue, through the Commissioner of Service Tax, supported the demand. The Supreme Court analysed the statutory scheme, noting that Section 65 is not the charging section but a definition section. Section 65(23) defines cargo handling service and excludes handling of export cargo, but that exclusion by itself does not take the services outside the definition of taxable service. Sub-clause (zzm) of Section 65(105) defines taxable service to include any service provided or to be provided to any person by Airports Authority or by any other person in any airport or a civil enclave, and was introduced with effect from 10.09.2004. Section 66, the charging section, levies service tax at the rate of twelve per cent on the value of taxable services referred to in sub-clauses including (zzm). The court held that the definition of taxable service is wide enough to cover any kind of service provided by the Airports Authority in any airport, and the exclusion of export cargo from cargo handling service makes no difference to chargeability under sub-clause (zzm). Reliance on circulars was rejected as circulars cannot override express statutory provisions. Accordingly, the Supreme Court held that the CESTAT and the authorities below did not err in taxing the services rendered by the appellant in relation to export cargo as taxable service under sub-clause (zzm) of Section 65(105) read with Section 66 of the Finance Act, 1994 with effect from 10.09.2004. The appeal was dismissed as lacking merit, and pending applications were disposed of.
Headnote
A) Service Tax - Taxable Services - Airport Services - Finance Act, 1994, Sections 65(105)(zzm), 66 - The appeal concerned service tax on export cargo handling by the airport authority from 01.10.2003 to 31.03.2007, with confirmation of liability under Airport Services with effect from 10.09.2004 - The court held that every kind of service rendered by an airports authority in any airport is a taxable service under sub-clause (zzm) of Section 65(105), irrespective of separate definitions - Section 66 levies tax on such taxable services - Held that the authorities below did not err in taxing the services (Paras 10-19, 23). B) Service Tax - Cargo Handling Service - Exclusion of Export Cargo - Finance Act, 1994, Section 65(23) - Assessee contended that handling of export cargo was excluded from cargo handling service and therefore not taxable - The court held that exclusion from the definition of cargo handling service under Section 65(23) does not take the services outside taxable service under Section 65(105)(zzm) - Express statutory provision prevails over circulars - Held that appeal lacked merit and was dismissed (Paras 7-9, 20-24). C) Service Tax - Subordinate Legislation - Circulars - Finance Act, 1994, Section 65 - Assessee relied on circulars to claim exemption - Court held circulars are merely executive instruments and cannot override express statutory provisions - Held that reliance on circulars was of no avail (Paras 22-23).
Issue of Consideration
Whether services rendered by Airports Authority of India in handling export cargo at airports are taxable under Section 65(105)(zzm) of Finance Act, 1994 despite being excluded from the definition of cargo handling service under Section 65(23)
Final Decision
Supreme Court dismissed the appeal, upholding service tax demand on export cargo handling services as taxable service under Section 65(105)(zzm) read with Section 66 of Finance Act, 1994 with effect from 10.09.2004. Pending applications were disposed of.
Law Points
- Section 65(105)(zzm) of Finance Act
- 1994 defines taxable service broadly to include any service provided by Airports Authority in any airport or civil enclave
- handling of export cargo excluded from cargo handling service under Section 65(23) does not exclude it from taxable service
- charging Section 66 levies service tax on taxable services referred to in sub-clause (zzm)
- circulars cannot override express statutory provisions
