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SC refuses to vacate stay on levy of tax on airport services
August, 29th 2007
The Supreme Court on Monday directed the Airports Authority of India (AAI) to move the Madras High Court for obtaining vacation of stay on levy of service tax on airport services.

Levy of sales tax by AAI has been challenged by licencees in the high courts of Delhi, Bombay, Madras, Karnataka, Kerala, and Andhra Pradesh. The high courts had stayed the recovery notices issued by the authority.

AAI has also sought transfer of a bunch of petitions in this regard to the Delhi High Court.

A bench headed by Justice BN Agrawal refused to transfer the petitions saying AAI should move the high court for vacation of stay.

Earlier, it had issued notice to various parties, including Jet Airways, Flemigo Duty Free Shops, Thomas Cook India, Siddhi Vinayak Enterprises, PK Hospitality Services, Karnataka Commercial and Industrial Corporation, asking them to explain why the petitions should not be transferred to the Delhi High Court.

While seeking transfer of petitions, AAI had contended that there was a likelihood that the high courts might give different interpretations on the same issue which would lead to "judicial disharmony."

It further submitted that the stay on levy of service tax would make it difficult to recover later as the premises or shops on the airports, maintained and developed by it, had been leased out for fixed periods.

According to the petition, the Director General of Service Tax had brought airport services under the service tax net by the Finance Act 2004 with effect from September 2004 and AAI was the only medium which collected service tax and deposited the same with the service tax department.

AAI had levied service tax on the licencees for airport services like services provided by airlines, cargo and passenger handling, security, transit facilities, landing charges, parking etc and other non-traffic revenues.
 
 
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