Case Law Details
Service providers under licence from the Airports Authority of India (AAI) have to pay service tax and the liability is not that of AAI, the Supreme Court ruled last week in the case, Sparkway Enterprises vs Commissioner of Central Excise. AAI had entered into a licence agreement with the firm for collecting airport admission charges on behalf of AAI at Calicut airport. The Central Board of Excise and Customs had clarified in 2004 that services provided at airports have to pay service tax. When the authorities demanded service tax from the firm, it refused to pay arguing that it was not permitted to collect service tax from the public and the duty was on AAI. The latter was the principal service provider and the assessee firm was only a collecting agent. Rejecting the contention, the Supreme Court stated that according to the licence agreement, the firm was obliged to pay all rates and taxes.
P.C. Paulose, M/s. Spark way Enterprises Vs. Commissioner of Central Excise & Customs – Supreme Court
Dr. MUKUNDAKAM SHARMA, J.
1. Leave granted.
2. The issue that falls for consideration in this appeal is whether the appellant, who is a licencee, could be held liable for payment of service tax when actually the service provided by them could and should be said to be provided by the Airport Authority of India (for short “AAI”). It was contended on behalf of the assessee that the role of the licensee-appellant was the role of an agent and was therefore limited to collecting of fees for the services rendered by AAI. In order to answer the aforesaid issue it would be necessary to set out certain basic facts giving rise to the aforesaid issue.
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