| Citation | Central GST Delhi – III v Delhi International Airport Ltd (Civil Appeal No. 8996 of 2019) |
| Date of judgement | May 19, 2023 |
| Court | The Supreme Court of India |
| Case type | Civil |
| Appellant | Central GST Delhi- III |
| Respondent | Delhi international airport LTD |
| Bench | Justice S. Ravindra Bhat and Justice Dipankar Datta |
FACTS OF THE CASE
• The respondent “Delhi international airport Ltd” agreed to a joint venture with the airports authority of India hereafter “AAI”, a corporate body created by the Airports Authority of India Act, 1994 [hereafter “AAI Act
• The Respondent consented to carry out certain tasks mandated by the AAI Act.
• By multiple show-cause notices (dated February 27, 2009) issued by the Central Government under Section 22A of the AAI Act, the respondent was given permission to collect a “development fee” at the concerned airports for a 48-month period, at the rate of Rs. 100 for each departing domestic passenger and Rs. 600 for each departing international passenger.
• A show-cause notice (SCN) was sent by the service tax commissioner to demand payment of service tax on development fees that were received across a number of time periods. These notifications were decided upon and verified. The Revenue Department, also referred to as “the Appellant,” fulfilled its demands and assessed penalties in order to resolve all show cause notices.
• Aggrieved by the Order of the Revenue department, the Respondent filed an appeal before the Customs Excise & Service Tax Appellate Tribunal (“the CESTAT”) allowed the Respondent’s appeal, holding that the development fee collected was not liable to service tax levy.
ISSUE
The contention of the case depended on Whether the development fees collected by the airport on behalf of airport authority is chargeable to service tax?
RELEVANT PROVISIONS
1. Section 65 (105) (zzm) of the Finance Act, 1994,
2. Section 65 (3d)
3. Section 68 (1) of the Finance Act
4. Section 67 (1) of the Finance Act,
5. The relevant provisions of the Airports Economic Regulatory Authority of India Act, 2008 and the Aircraft Rules, 1937
6. The relevant provisions of the AAI Act {section 22 , Section 22A}
ARGUMENTS
Appellant: learned counsel,Ms.Nisha Bagchi for the revenue, submits that assessees function as licensees of Airports ,Ms bagchi contended that UDF are only amounts collected to expand or enhance various services such as providing passenger facilities within airports.
Even the agreement the occupants have made with the AAI, indicates that UDF will strengthen passenger facilities.
• Respondent: Learned counsel pointed out that by Section 22A of the AAI Act, the authority “may”, after the previous approval of the Central Government “levy on, and collect from, the embarking passengers at, an airport, the Development Fees”. It was contended that such levy cannot be called a tax because it is discretionary and subject to the approval of the Central Government.
Counsel pointed out that there is no nexus between the amounts charged under Section 22A of the AAI Act and any facilities provided. In the absence of a link between the amount charged as DF/UDF and any service rendered, such amounts cannot be liable to service tax.
JUDGEMENT
The court examined the history of airport regulation in India, as well as the laws pertaining to it. After scrutinizing the provisions of the AAI Act, including the amendment to it, in 2003.
• It noted that the development fee collected under Section 22A of the AAI Act is a statutory exaction and not a tariff, contrary to the Union of India’s contention, and that there is a difference between the fees, charges, rent, etc., collected under Section 22 of the AAI Act and the User Development Fee (“UDF”) levied and collected under Section 22A of the AAI Act.
• Further noted that the UDF collected by the Respondent is intended to cover the funding gap of project costs for the development of future establishment at the airports.there is nothing on documents to show that any supplementary benefit has accrued to passengers, visitors, traders, airlines, etc., upon levy of the UDF during the period in question.
• The court held that there is no requirement to collect a development fee, and that the lack of these elements does not make UDF any less a statutory levy.The revenue’s appeals are dismissed because the court determined that the impugned orders cannot be faulted, and there is no order on costs in this particular case.
REFERENCES
https://indiankanoon.org/doc/33926990/
https://taxguru.in/service-tax/service-tax-leviable-user-development-fees-collected-airport-authority-statutory-levy.html
This case analysis is prepared by Yashika Sain of LC-1 , Faculty of Law , Delhi University , intern at Legal Vidhiya.
