Lufthansa Airlines booked for evading service tax of Rs 5.42 Crore

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Lufthansa Airlines booked for evading service tax of Rs 5.42 Crore

AIT News Network

NEW DELHI. Service Tax Department has booked M/s Lufthansa German Airlines for evading service tax of Rs 5.42 Crore by a unique modus operandi.

Non-Economy class international journey has been subjected to service tax vide the Finance Act 1994 as amended vide Finance Act 2006 with effect from 1^st May 2006.

“taxable service” under the Finance Act 1994 as amended means any service provided or to be provided,-

(zzzo) 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;

(56a) “international journey”, in relation to a passenger, means his journey from any customs airport on board any aircraft to a place outside India;

(77c) “passenger” means any person boarding, at any customs airport, an aircraft for performing an international journey, but does not include—

(i) a person who has arrived at such customs airport from a place outside India and is in transit through India, provided that he does not pass through immigration and does not leave customs area and continues his journey to a place outside India; and

(ii) a person employed or engaged by the aircraft operator in any capacity on board the aircraft.

M/s Lufthansa Airlines were found collecting fare from passengers under various head such as basic fare, YQ charges, YR charges etc. and were paying service tax only on basic fare whereas as per service tax law they were required to pay service tax on the gross amount charged for providing taxable service.

On being quizzed by service tax department; Lufthansa Airlines admitted there service tax liability and thus subsequently they have deposited service tax due on YQ and YR Charges.

Consequent to investigation, Lufthansa German Airlines deposited Rs. 5.42 on account of service tax liability on services of transport of passengers by air in first class/economy class.

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