The Supreme Court has upheld an order of the CESTAT taxing the services rendered by the Airports Authority of India in relation to export cargo as a taxable service under sub-clause (zzm) of Section 65(105) of the Finance Act,1994. The Apex Court held that any kind of services, whether in respect of export cargo provided by the Airports Authority to any person after inclusion of subclause (zzm) would be a taxable service.

The Appeal before the Apex Court was filed under Section 35L of the Central Excise Act, 1944, against the judgment pronounced by the Customs, Excise & Service Tax Appellate Tribunal.

The Division Bench of Justice Pankaj Mithal and Justice Prasanna B. Varale stated, “It may be pertinent to note that sub-clause (zzm) was introduced w.e.f. 10.09.2004. Accordingly, any kind of services whether in respect of export cargo provided by the Airports Authority to any person after inclusion of subclause (zzm) would be taxable service.”

Advocate Y K Kapur represented the Appellant, while AOR Gurmeet Singh Makker represented the Respondent.

Factual Background

The appeal was filed by the Airports Authority of India, a Government of India organisation under the Ministry of Civil Aviation, engaged in managing various airports in India. The appellant handles cargo at airports, including export cargo, which involves a number of activities like unloading, carting, X-ray, export packing, etc. These services are rendered from the time the cargo is accepted for shipment till it is placed on the aircraft. The Commissioner (Adjudication), Service Tax, Delhi confirmed the service tax liability upon the appellant for the period October 1, 2003, to March 31, 2007, under the category of “Storage and Warehousing Service” up to September 9, 2004 and under the category “Airport Services”.

The aforesaid order was assailed by the appellant in an appeal before the CESTAT, which was disposed of by the order impugned, confirming the service tax liability under the category “Airport Services” with effect from September 10, 2004. Aggrieved thereby, the appellant approached the Apex Court.

Reasoning

The Bench, at the outset, explained that Section 65 of the Act is not the charging section but a provision defining various terms in connection with the service tax. Referring to Sub-section (23) of Section 65, which defines “cargo handling service”, the Bench held that handling of export cargo stands excluded from the definition of “cargo handling service”. The aforesaid provision does not speak about charging of service tax upon cargo handling service.

The Bench also referred to “Taxable services” provided under Sub-section (105) of Section 65 of the Act, which are defined as services provided or to be provided to various persons, including those falling under sub-clause (zzm) i.e. service provided to any person by the Airports Authority or by any other person, in any airport or a civil enclave. “The aforesaid sub-clause (zzm) is wide enough to cover any kind of service provided to any person by the Airport Authorities in any airport or a civil enclave. Therefore, whatever services are provided by the Airports Authority in any airport falls under “taxable service” in view of sub-clause (zzm), it added.

“The aforesaid definition of the taxable service is very wide and takes into its fold any kind of service that may be provided to any person by the Airports Authority in any airport. Accordingly, all kinds of services rendered by the Airports Authority in any airport are taxable services and are chargeable to service tax under Section 66 of the Act”, the Bench noted.

The Bench further held, “The definition of “cargo handling service” includes various kinds of services rendered at the airport, but it specifically excludes “handling of export cargo”. Thus, “handling of export cargo” stands excluded from the “cargo handling service” but that by itself would not be sufficient to exclude it from the definition of taxable service under Sub-section (105) of Section 65 of the Act. The services rendered by the Airports Authority to any person in any airport are in the nature of taxable service and the exclusion of “export cargo” from the definition of “cargo handling service” makes no difference as to the chargeability of service tax on the services so rendered falls under the taxable service.”

Reference was made to charging Section 66 of the Act, which provides that there shall be a tax levied on the services referred to in sub-clauses as mentioned therein, including sub-clause (zzm). “In short, any kind of services which are covered under any of the sub-clauses of Section 66, including (zzm) are chargeable to tax and are taxable service”, it added. As per the Bench that CESTAT or the Authorities below had not erred in taxing the services rendered by the appellant in relation to export cargo as a taxable service under sub-clause (zzm) of Sub-section (105) of Section 65. Thus, the Bench dismissed the appeal.

Cause Title: Airports Authority of India v. Commissioner of Service Tax (Neutral Citation: 2025 INSC 1141)

Appearance

Appellant: Advocates Y K Kapur, Bhushan Kapur, AOR Amrendra Kumar Mehta

Respondent: AOR Gurmeet Singh Makker

Click here to read/download Judgment


Justice Pankaj MithalJustice Prasanna B. Varale

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.