Circular No. 85/3/2006-ST
17th October, 2006
Government of India
Ministry of Finance
Department of Revenue
Tax Research Unit
Subject: Levy of service tax on international journey by aircraft
Service tax is leviable with effect from 1st May, 2006 on services provided by an aircraft operator to passengers embarking in India for international journey by any class, other than economy class, under section 65(105)(zzzo) read with section 66 of the Finance Act 1994. Board of Airline Representatives in India (BAR) have sought clarifications on the levy of service tax on the above mentioned service.
2. The Central Board of Excise and Customs has examined the issues. The issues in brief and the clarifications are furnished below:
|1||In the case of international journey commencing from an Indian airport involving stopover/ transfer at intermediate airports outside India before reaching the destination (say Mumbai-Dubai-London-New York), whether service tax would be leviable on the value indicated in the ticket or on the value attributable to the first sector (Mumbai-Dubai)?||International journey is from Mumbai to New York. Stopover / transfer at intermediate airports is incidental or part of the main journey. Stop over / transfer at intermediate airports outside India is of no relevance or consequence for levy of service tax under section 65(105)(zzzo) read with section 66 of the Finance Act,1994. Service tax is leviable on the total value of the ticket representing the consideration of a single composite service.|
|2.||In case the international journey also includes travel in a domestic sector as part of the international journey (say Delhi-Mumbai-London), whether service tax is leviable excluding the value attributable to the domestic sector or on the total value of the ticket treating the domestic sector as integral part of international journey?||Service tax is leviable on the total value of the ticket.
|3.||In the case of round trip/return ticket, whether service tax is leviable on the total value of the ticket or only half the value of the ticket?||Service tax is leviable on the total value of the ticket.|
|4.||In the case of journey commencing from an airport outside India and completed at an airport outside India but including a sector wherein the passenger disembarks and subsequently embarks at an Indian airport as part of international journey (say Sydney-Mumbai-Dubai-Singapore-Sydney), whether service tax is leviable for Mumbai-Dubai sector only or on the total value of the ticket?||Service tax is not leviable in such cases.
|5.||Whether ticket issued outside India for an international journey commencing from India (say Delhi-London) is leviable to service tax?||
Service tax is payable by the service provider for the taxable service provided. Place of purchase/ issue of ticket is of no relevance or consequence to determine the levy of service tax under section 65(105)(zzzo) read with section 66 of the Finance Act, 1994.