AIR TRANSPORT SERVICE OF ANY PASSENGER EMBARKING IN INDIA
FOR INTERNATIONAL JOURNEY (OTHER THAN ECONOMY CLASS)

 

Date of Introduction: 01.05.2006 vide Notification No.15/2006 dated 25.04.2006

Definitions:

“international journey”, in relation to a passenger, means his journey from any customs airport on board any aircraft to a place outside India; (section 65(56a) of the Finance Act, 1994)

“customs airport” means an airport appointed as such under clause (a) of subsection (1) of section 7 of the Customs Act, 1962; ( section 65(35a0 of the Finance Act, 1994)

“taxable service” means any service provided or to be provided to any passenger, by an aircraft operator, in relation to scheduled or non-scheduled air transport of such passenger embarking in India for international journey, in any class other than economy class.

Explanation 1.—For the purposes of this sub-clause, economy class in an aircraft meant for scheduled air transport of passengers means,—

(i) where there is more than one class of travel, the class attracting the lowest standard fare; or

(ii) where there is only one class of travel, that class.

Explanation 2.—For the purposes of this sub-clause, in an aircraft meant for non scheduled air transport of passengers, no class of travel shall be treated as economy class; (section 65(105)(zzzo) of Finance Act, 1994)

Value of Taxable Service:

The value of taxable service shall be the gross amount charged by the service provider for providing such service and the money value of any other consideration ( if any) received for providing such service. The value of taxable service shall be determined as per the provisions made under section 67 of the Finance Act, read with Service Tax (Determination of Value ) Rules, 2006

Who is responsible to pay Service Tax:

The service provider is responsible to pay service tax. However, in cases, where the provider of taxable service is located outside India and the recipient of service is located in India, the recipient of service is responsible for payment of service tax. The responsibility to pay service tax under such situations is determined by the provisions made under section 66A of the Finance Act, 1994, read with Taxation of Services (Provided from outside India and received in India) Rules, 2006

Scope of Service:

Liability to pay service tax is on the aircraft operator who is the service provider. Economy class passengers are excluded from the levy of service tax under this sub-clause.  Transit passengers not leaving the customs area will not be covered under this sub-clause.

(Ref: Joint Secretary (TRU)’s letter D.O.F.No. 334/4/2006-TRU dated 28.02.2006)

General Exemptions:
 

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