Delhi High Court
M/S Siddhi Vinayak Enterprises vs The Airports Authority Of India on 12 April, 2012
Author: A.K.Sikri
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 12 April, 2012
+ W.P.(C) 15095/2006
HANS ENTERPRISES ..... Petitioner
Through: Mr.Sandeep Sethi, Sr. Advocate with
Mr.P.S.Bindra, Advocate
Versus
AIRPORTS AUTHORITY OF INDIA & ORS. ..... Respondents
Through: Mr.Sunil Ahuja, Advocate for R-1.
Mr.Atul Nanda, Sr. Advocate with
Mr.Khalid Arshad, Advocate for
Airports Authority of India
Ms.Anajana Gosain, Adv. for UOI
AND
+ W.P.(C) 15096/2006
M/S SUSHILA ..... Petitioner
Through: Mr.Sandeep Sethi, Sr. Advocate with
Mr.P.S.Bindra, Advocate
Versus
AIRPORTS AUTHORITY OF INDIA & ORS. .... Respondents
Through: Mr.Sunil Ahuja, Advocate for R-1.
Mr.Atul Nanda, Sr. Advocate with
Mr.Khalid Arshad, Advocate for
Airports Authority of India
Ms.Anajana Gosain, Adv. for UOI
AND
+ W.P.(C) 532/2007
AJAY K. SHARMA ..... Petitioner
Through: Ms. Anusuya Salwan & Ms. Renuka
Arora, Advs.
Versus
UOI & ORS ..... Respondents
Through: Mr. Atul Nanda, Sr. Adv. with Mr.
Digvijay Rai, Adv. for AAI.
AND
+ W.P.(C) 545/2007
W.P.(C)15095/2006,15096/2006,532/2007,545/2007,546/2007,1296-97/2007,4655/2011,8261/2011,8262/2011,
8263/2011&8264/2011 Page 1 of 11
GARUDA AVIATION SERVICES (P) LTD. ..... Petitioner
Through:
Versus
AIRPORT AUTHORITY OF INDIA & ANR. ..... Respondents
Through:
AND
+ W.P.(C) 546/2007
P.K. HOSPITALITY SERVICES PVT. LTD. ..... Petitioner
Through:
Versus
AIRPORT AUTHORITY OF INDIA & ANR. ..... Respondents
Through:
AND
+ W.P.(C) 1296/2007
AERO ART EMPORIUM ..... Petitioner
Through: Mr. Naresh Kaushik & Mr. Amita
Kalkal Chaudhary, Advs.
Versus
UOI & ORS. ..... Respondents
Through: Mr. Atul Nanda, Sr. Adv. with Mr.
Digvijay Rai, Adv. for AAI.
AND
+ W.P.(C) 4655/2011
V HARIHARAN ..... Petitioner
Through: None.
Versus
AIRPORT AUTHORITY OF INDIA & ORS ..... Respondents
Through: Mr. Atul Nanda, Sr. Adv. with Mr.
Khalid Arshand, Adv. for AAI.
AND
+ W.P.(C) 8261/2011
M/S BALAJI CATERERS ..... Petitioner
Through: None.
Versus
THE AIRPORT AUTHORITY OF INDIA ..... Respondent
W.P.(C)15095/2006,15096/2006,532/2007,545/2007,546/2007,1296-97/2007,4655/2011,8261/2011,8262/2011,
8263/2011&8264/2011 Page 2 of 11
Through:
Mr. Atul Nanda, Sr. Adv. with Mr.
Khalid Arshand, Adv. for AAI.
AND
+ W.P.(C) 8262/2011
M/S SIDDHI VINAYAK ENTERPRISES ..... Petitioner
Through: None.
Versus
THE AIRPORTS AUTHORITY OF INDIA ..... Respondent
Through: Mr. Atul Nanda, Sr. Adv. with Mr.
Khalid Arshand, Adv. for AAI.
AND
+ W.P.(C) 8263/2011
M/S CANARA CAFETERIA ..... Petitioner
Through: None.
Versus
THE AIRPORTS AUTHORITY OF INDIA ..... Respondent
Through: Mr. Atul Nanda, Sr. Adv. with Mr.
Khalid Arshand, Adv. for AAI.
AND
+ W.P.(C) 8264/2011
JET AIRWAYS LTD ..... Petitioner
Through: Mr. U.A. Rana & Ms. Mrinal
Mazumdar, Advs.
Versus
UOI AND ORS ..... Respondents
Through: Mr. Atul Nanda, Sr. Adv. with Mr.
Khalid Arshand, Adv. for AAI.
CORAM :-
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
JUDGMENT
A.K.SIKRI, ACTING CHIEF JUSTICE.
1. Of these petitions being listed together, some have been transferred to
this Court under orders of the Apex Court. After hearing the counsels for the
W.P.(C)15095/2006,15096/2006,532/2007,545/2007,546/2007,1296-97/2007,4655/2011,8261/2011,8262/2011,
parties, we find that all the petitions can be disposed of by this common
order.
2. Each of the petitioners has entered into an agreement with the
respondent Airports Authority of India (AAI). The genesis of these petitions
is in insertion of Clause (zzm) in Section 65 (105) of the Finance Act, 1994,
w.e.f. 1st April, 2004. Section 65 (105) defines taxable service. Clause (zzm)
has included within the definition of taxable service, the service provided:-
" To any person, by airports authority or by any
other person, in any airport or a civil enclave:
PROVIDED that the provisions of Section 65A shall
not apply to any service when the same is rendered
wholly within the airport or civil enclave. "
3. The Service Tax Authorities took the view that the agreements
entered into by each of the petitioners with the respondent AAI attracted
payment of service tax under the said Clause (zzm). Accordingly notice was
sent to the respondent AAI to pay the service tax.
4. Each of the petitioners denies applicability of service tax qua the
agreement entered into by each of them with the respondent AAI. During
the hearing it has transpired that in most of the cases it was the stand of the
respondent AAI also that no service tax was payable qua the said
agreements/transactions. However since service tax was demanded by the
Service Tax Authorities from the respondent AAI, the respondent AAI in
turn raised demand on the petitioners and which has resulted in filing of
these petitions.
W.P.(C)15095/2006,15096/2006,532/2007,545/2007,546/2007,1296-97/2007,4655/2011,8261/2011,8262/2011,
5. Though in some of the petitions challenge to the vires of the statutory
provision has been made (and that is how the petitions are before us) but
what we find after the hearing is that the challenge is to the applicability
rather than to the vires. It is the contention of the petitioners that no service
is being rendered by the respondent AAI to them or by them at the airport
and thus no service tax is leviable on the transaction/agreement between
them and the respondent AAI.
6. However the Commissioner, Service Tax has completed the
assessment and held the respondent AAI liable for payment of service tax.
The respondent AAI has not accepted that decision and has filed an appeal
which is pending adjudication.
7. Besides the aforesaid dispute, there is also a dispute, as to who is to
bear the service tax, if ultimately found applicable.
8. We are however of the view that since the petitioners as well as the
respondent AAI, both are challenging the very leviability of service tax on
the subject transaction and further since the appeal against the order levying
the service tax is pending consideration and in adjudication of which appeal,
the questions as raised herein will necessarily have to be decided, and yet
further since the said appellate fora is the appropriate fora to decide the said
questions, it is not necessary for the same to be decided by us.
9. The petitioners have however contended that they are not parties in
the said appeal proceedings. The same however does not pose any
impediment. The respondent AAI has no objection if each of the petitioners
is permitted to intervene in the said appeal and to oppose the applicability of
W.P.(C)15095/2006,15096/2006,532/2007,545/2007,546/2007,1296-97/2007,4655/2011,8261/2011,8262/2011,
Clause (zzm) and leviability of service tax on their respective transactions
with the respondent AAI. The Service Tax Authorities who are also
respondents in these petitions also have no objection.
10. We accordingly direct that each of the petitioners herein shall be
allowed to join the appeal proceedings and shall be heard therein. We direct
the respondent AAI to inform to each of the petitioners the next date of
hearing in the said appeal and to also furnish such other details as may be
required by the petitioners.
11. As far as the dispute inter se the petitioners and the respondent AAI,
in the event of it being ultimately held that service tax is leviable, we find
that the agreements of each of the petitioners with the respondent AAI
contain an arbitration clause.
12. Another question which arises is as to the interim arrangement, in as
much as in some cases the respondent AAI has already recovered the
service tax from the petitioners, in some cases the respondent AAI is
holding security deposit/bank guarantees furnished by the petitioners and in
some others the demand of the respondent AAI for service tax is
outstanding. We are, herein below recording in a tabular form, the position
in each of the cases.
Sr. Writ Petition Particulars
No. Number
1. 15095/2006 The respondent AAI had awarded the contract
to the petitioners for collection and disposal of
2. 15096/2006
garbage from IGI Airport, Delhi. The said
W.P.(C)15095/2006,15096/2006,532/2007,545/2007,546/2007,1296-97/2007,4655/2011,8261/2011,8262/2011,
Sr. Writ Petition Particulars
No. Number
contracts have already come to an end. Vide
interim order in these petitions the respondent
AAI was restrained from taking any coercive
steps against the petitioners for
collection/recovery of service tax. However the
respondent AAI is withholding the security
deposit in the form of FDRs of the petitioners.
The interest of the respondent AAI is thus fully
safeguarded. The petitioners are however
directed to keep the FDRs renewed from time to
time. In the event of the service tax being
ultimately levied, the dispute as to who is to
bear the same shall be resolved by arbitration.
The parties shall be entitled to seek interim
measures in the said arbitration proceedings.
The petitioners to within one month also file
affidavits undertaking to this Court to pay the
service tax amount if ultimately found due to
the respondent AAI.
3. 532/2007 The petitioner had entered into an agreement
with the respondent AAI for operating a
Jewellery Shop in the Transit Lounge,
Terminal-II, IGI Airport, Delhi and has already
paid the subject service tax for the period
W.P.(C)15095/2006,15096/2006,532/2007,545/2007,546/2007,1296-97/2007,4655/2011,8261/2011,8262/2011,
Sr. Writ Petition Particulars
No. Number
1.4.2006 to 1.1.2007 to the respondent AAI,
though under protest. There is no dispute that in
the event of the service tax ultimately held to be
leviable, the liability is of the petitioner. There
is thus no need for arbitration. However in the
event of the service tax being held not leviable
and being refunded to the respondent AAI, the
same shall enure to the benefit of the petitioner.
4. 545/2007 The petitioners had entered into an agreement
with the respondent AAI for providing Car
5. 546/2007 Parking Facility/Restaurants/Snack Bars at
several airports. Upon insertion of Clause (zzm)
(supra) the petitioners enquired from the
respondent AAI whether any service tax was to
be collected from the end user. The respondent
AAI replied in the negative. Subsequently
however on service tax being levied on the
respondent AAI, the respondent AAI demanded
the same from the petitioners. The petitioners besides
disputing the leviability of the service tax also
contended that even if it was leviable, they were
not liable since inspite of their query the respondent
AAI had informed them that no service tax was
leviable. The petitioners invoked the arbitration
W.P.(C)15095/2006,15096/2006,532/2007,545/2007,546/2007,1296-97/2007,4655/2011,8261/2011,8262/2011,
Sr. Writ Petition Particulars
No. Number
clause and ultimately approached the Bombay
High Court which also directed appointment of
an arbitrator qua the agreement with respect to
the Bombay Airport. Though the respondent
AAI in pursuance thereto also appointed
arbitrator for similar dispute qua other airports
but subsequently revoked the appointment for
other airports save Mumbai. Though the
petitioners have not paid the service tax
demanded by the respondent AAI but the
respondent AAI is holding bank
guarantees/FDRs furnished by the petitioners. It
is directed that the said bank guarantees/FDRs
shall be kept alive as aforesaid and the
petitioners shall also furnish the undertaking as
directed in serial no.1&2 above. It is further
directed that in the event of the service tax
being ultimately held leviable, the arbitration
proceedings shall be qua all airports subject
matter of agreement and not only Mumbai
Airport.
6. 1296/2007 The agreement of the petitioner herein was with
respect to the „Travellers Shop‟ at Kolkata
Airport. This petitioner has also already paid the
W.P.(C)15095/2006,15096/2006,532/2007,545/2007,546/2007,1296-97/2007,4655/2011,8261/2011,8262/2011,
Sr. Writ Petition Particulars
No. Number
service tax to the respondent AAI. Accordingly
the directions as in serial no.3 above shall apply
to this case also.
7. 4655/2011 The agreement in this case was with respect to
the „Visitors Needs‟ Shop at
Thiruvananthapuram Airport. The counsels are
unable to inform whether the petitioner has paid
the service tax or furnished any other security.
Else, it is not in dispute that liability if any
ultimately held is of the petitioner. It is directed
that if the petitioner has not already paid the
service tax or if the petitioner has not furnished
any security, the petitioner shall as aforesaid
submit an undertaking to pay the service tax if
ultimately found due.
8. 8261/2011 The agreement in this case is with respect to
„Tea/Snack Shops‟ at Chennai Airport. The
petitioner has already paid the service tax.
Accordingly, the position as in serial no.3 above
shall prevail.
9. 8262/2011 The agreement in this case is with respect to the
„Left Luggage Facility‟ at Chennai Airport. The
service tax has already been paid. Accordingly
the position as in serial no.3 above shall prevail.
W.P.(C)15095/2006,15096/2006,532/2007,545/2007,546/2007,1296-97/2007,4655/2011,8261/2011,8262/2011,
Sr. Writ Petition Particulars
No. Number
10. 8263/2011 The agreement in this case is qua a „Cafeteria‟
at Coimbatore Airport. The service tax has
already been paid. The position as in serial no.3
above shall prevail.
11. 8264/2011 The agreement in this case was for „Office
Space‟. The petitioner though has not paid the
service tax but has furnished the bank
guarantee. There is no dispute that service tax if
ultimately found due is to be borne by the
petitioner. Accordingly, it is directed that till the
final determination, the bank guarantee shall be
kept alive.
13. The petitions are disposed of with the aforesaid directions. No order
as to costs.
ACTING CHIEF JUSTICE
RAJIV SAHAI ENDLAW, J
APRIL 12, 2012
„pp ‟
W.P.(C)15095/2006,15096/2006,532/2007,545/2007,546/2007,1296-97/2007,4655/2011,8261/2011,8262/2011,
