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Tax & Customs LawSupreme Court of India

Airports Authority of India vs. Commissioner of Service Tax

Not available · 2025 INSC 1141Decided 23 Sept 2025
Not available
Justice Pankaj Mithal · Justice Prasanna B. Varale

Background

Airports Authority of India (AAI), which handles export cargo operations (unloading, X-ray, packing, etc.) at airports, was assessed service tax by the Commissioner (Adjudication) for the period 2003-2007 under "Storage and Warehousing Service" and later "Airport Services." AAI's appeal to CESTAT was dismissed except that liability was confirmed only from 10.09.2004 onward under the "Airport Services" category. AAI challenged this before the Supreme Court, arguing that handling of "export cargo" is expressly excluded from the definition of "cargo handling service" under Section 65(23) of the Finance Act, 1994, and therefore should not attract service tax.

Decision Breakdown

The Court explained that Section 65 merely defines terms, while the actual charging provision is Section 66, which taxes all services falling under any sub-clause of Section 65(105), including sub-clause (zzm): a broad category covering any service provided by an Airport Authority at any airport. The Court held that the specific exclusion of "export cargo" from the narrower "cargo handling service" definition does not exempt AAI's services from the separate, wider "taxable service" definition under sub-clause (zzm), which was introduced with effect from 10.09.2004. Circulars relied on by AAI could not override the express statutory language. The appeal was dismissed and the CESTAT order upheld.

Lesson Learnt

An exclusion carved out under one specific statutory definition does not automatically exempt an activity from tax if it independently falls under a separate, broader taxable-service category: each charging provision must be read on its own terms, and circulars cannot override clear statutory text.

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