LexP.C. PAULOSE, M/S. SPARKWAY ENTERPRISES versus COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS
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[2011] 1 S.C.R. ~72 A P.C. PAULOSE, M/S. SPARKWAY ENTERPRISES v. --1- ~ COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS (Civil Appeal No. 483 of 2011) B JANUARY 13, 2011 [DR. MUKUNDAKAM SHARMA AND ANIL R. DAVE, JJ.] ~ c Finance Act, 1994 - s. 65 - Clause 105 (zzm) and 3d - Licence granted by Airport Authority of lndia(AAI) to appellant for collecting airport admission ticket charges on behalf of AA/ for which the appellant was required to pay monthly licence fees - Liability of the appellant to pay service tax - Held: Though the appellant deposited monthly licence fees to AA/ D but it collected the required fees from the users of the facility and provided all facilities to such customers - Appellant ~ being a person authorized by AA/ to provide service in express terms and conditions, it became liable to pay tax as it was an authorized person to provide taxable service and E collect the admission ticket charges on contract basis - The appellant stepped into the shoes ofAAI for the service provided on the basis of the authorization and became liable to pay tax in terms of the operation of s. 65, Clause 105 (zzm) ~ - Service Tax. F Words and Phrases - 'Airport authority' and 'taxable service' - Meaning of - Finance Act, 1994 - s.65, Clauses (3d) and 105(zzm) - Airports Authority of India Act, 1994 - s.3. G The Airport Authority of India '(AAI) entered Into a licence agreement with the appellant by which the 'I- appellant was entrusted with the responsibility and the activity of collecting airport admission ticket charges on behalf of AAI Limited at Karipur Airport, Calicut. The H 872 P.C. PAULOSE, MIS. SPARKWAYENTERPRISES v . . 873 COMMNR. OF C.E.C. appellant was permitted to collect Rs. 50/- per visitor as A .. -Jr- airport admission ticket charges for which the appellant was required to pay an amount of Rs. 2,66,797/- per month as licence fee. The appellant collected the admission ticket charges for the period from 10.09.2004 to 31.03.2005. B The Central Board of Excise and Customs issued ~ circular No. 80/10/2004 ST dated 17.09.2004 in regard to service tax on airport services stating that services provided in an airport or civil enclave to any person by c AAI or by a person authorized by it or any other person having charge of management of an Airport are taxable under the aforesaid category. On the satisfaction that the appellant was required to pay service tax on airport services rendered by it as 'authorized person' of AAI at Karipur Airport, Calicut for the period from 10.09.2004 to D 31.03.2005 a show cause notice was issued to the appellant demanding service tax and education cess. There was also a proposal to demand interest under Section 75 of the Finance Act, 1994 on the above service tax and education cess as well as penalty under Section E 76 of the Finance Act, 1994. The appellant submitted reply pursuant to which the adjudicating authority confirmed the demand of service tax and education cess with interest under Section 75 of the Finance Act, 1994. Aggrieved, the appellant filed appeal before the F Commissioner of Central Excise & Customs (Appeals) which was, however, dismissed. The appellant filed second appeal before the Customs Excise & Service Tax Appellate Tribunal [CESTAT]. The Tribunal allowed the appeal holding that the appellant was only a collecting G ...,, agent and therefore the liability to pay the service tax rested .on AAI which was the actual service provider. Aggrieved, the department filed appeal before the High Court. By the Impugned judgment, the High Court allowed the appeal with a direction to the original H 874 SUPREME COURT REPORTS (2011] 1 S.C.R. A authority to verify whether AAI had paid service tax on the admission tickets during the relevant period and, if in case, AAI had paid the said service tax, the appellant would stand exonerated from the liability; otherwise, service tax would be recovered from the appellant as per B the provisions of the Act. The questiOn which arose for consideration in the· instant appeal was whether the appellant-licencee could be held liable for payment of sdrvice tax. C Dismissing the appeal, the Court HELD:1. The licence agreement clearly stipulates that Airport Authority of India (AAI) Is entitled in law to grant · licence at its Calicut Airport for the purpose of airport · 0 admission so as to provide .amenities and facilities to passengers a
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