CENTRAL GST DELHI - III versus DELHI INTERNATIONAL AIRPORT LTD

Citation: [2023] 7 S.C.R. 322 · Decided: 19-05-2023 · Supreme Court of India · Bench: S. RAVINDRA BHAT · Disposal: Dismissed

Judgment (excerpt)

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SUPREME COURT REPORTS
[2023] 7 S.C.R.
CENTRAL GST DELHI - III
v.
DELHI INTERNATIONAL AIRPORT LTD
(Civil Appeal No. 8996 of 2019)
MAY 19, 2023
[S. RAVINDRA BHAT AND DIPANKAR DATTA, JJ.]
Airports Authority of India Act, 1994: ss. 22, 22A – Finance
Act, 1994 – ss. 67 and 68 (1) –User development fee-UDF, levied
and collected u/s. 22A by the airport operation, maintenance and
development entities-Mumbai International Airport Pvt. Ltd., Delhi
International Airport Pvt. Ltd., and Hyderabad International Airport
Pvt. Ltd., from the domestic/international passengers departing the
airport – Levy of service tax – Held: User development fee levied
and collected by the airport entities is a statutory levy, thus, not
subject to service tax levy under the provisions of the Finance Act –
UDF collected by the assessee is to bridge the funding gap of project
cost for the development of future establishment at the airports –
There is nothing on record to show that any additional benefit has
accrued to passengers, visitors, traders, airlines etc., upon levy of
UDF during the said period – As part of the Union’s economic
policies, the upgradation and renovation of airports are funded
through UDF, which is a statutory levy – Airports Economic
Regulatory Authority of India Act, 2008 – s. 13 – Aircraft Rules,
1937 – r. 88, 89.
Dismissing the appeals, the Court
HELD: 1.1 The nature of development fee, collected under
Section 22A of the Airports Authority of India Act, 1994 is that of
statutory exactions and not fees or tariffs. [Para 29][339-H]
1.2 To attract service tax levy, a taxable service has to be
provided to a recipient, by a service provider, for a consideration
and in the absence of any nexus to any service rendered, an amount
charged, or value of service or goods provided without a
consideration would not be a taxing incident. [Para 32][341-E]
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[2023] 7 S.C.R. 322
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1.3 Besides the Airports Authority of India (Major Airports)
Development Fees Rules 2011, the assessee, in the case of
DIAL, has placed on the record, a letter issued to it, by AAI
which imposes controls on the utilization of amounts collected as
development fee; apart from the fact that the amounts are
deposited in an escrow, any plan for utilization has to be approved.
Unlike fees, rent, charges etc., provided under Section 22 of AAI
Act, assessee companies are authorized on behalf of the AAI to
levy and collect ‘development fee’ under Section 22A of the AAI
Act on behalf of the AAI and was applied for generating revenue
for utilization of the same for the specific purpose provided under
sub- clause (a), (b) and (c) of section 22(A) of the AAI Act. The
UDF collected by the assessee is to bridge the funding gap of
project cost for the development of future establishment at the
airports. There is nothing on record to show that any additional
benefit has accrued to passengers, visitors, traders, airlines etc.
upon levy of UDF during the period in question in the present
case. [Para 34][342-C-F]
1.4 There is a distinction between the charges, fee and rent
etc. collected under Section 22 of the AAI Act and the UDF levied
and collected under Section 22A of the AAI Act. It is that the
UDF is in the form of ‘tax or cess’ collected for financing the cost
of future projects and there was no consideration for services
provided by the assessee to the customer, visitors, passengers,
vendors etc. The aggregate of collections in the bank accounts
do not form part of profit and loss account. [Para 35][342-F-G]
1.5 It is also useful to notice that by a circular issued by the
CBEC, Circular No. 89/7/2006- ST dated 18.12.2006, it was
clarified that collection of amounts, by way of taxes, sovereign or
statutory dues, would not be subjected to service tax levy. [Para
36][342-G; 343-A]
1.6 In the instant case, undoubtedly neither is there any
compulsion to levy development fee, nor is the collection
conditional upon its deposit in the government treasury. However,
the absence of these features does not render User Development
fee(UDF) any less a statutory levy. Firstly, the ruling in Consumer
CENTRAL GST DELHI - III v. DELHI INTERNATIONAL
AIRPORT LTD
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SUPREME COURT REPORTS
[2023] 7 S.C.R.
Online Foundation’s case is conclusive that UDF is a statutory
levy. Secondly, the collection is not premised on rendering of any
service. Thirdly, the amounts collected are deposited in an escrow
amount, not within the control of the assesses.

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