SC exempts private airport developers from service tax on UDF
AVIATION & AIRPORTS

SC exempts private airport developers from service tax on UDF

In a significant ruling, the Supreme Court has provided relief to private airport developers by stating that they are not obligated to pay service tax on the user development fee (UDF) charged to passengers for the operation, maintenance, and development of Mumbai, Delhi, and Hyderabad international airports.

The court's decision takes into account a 2006 tax circular that clarifies that amounts collected as taxes, sovereign or statutory dues are exempted from service tax. A bench led by Justice S Ravindra Bhatt, while dismissing appeals by the goods and services tax (GST) authorities, emphasised that the UDF is a statutory levy, despite the absence of a requirement to impose the development fee or deposit it in the government treasury.

Previously, the customs, excise, and service tax appellate tribunal (CESTAT) had allowed appeals, stating that the development fee collected by the three airport operators was not subject to service tax. The revenue department, which had imposed tax demands and penalties on the development fee, approached the Supreme Court, arguing that the UDF constitutes an amount collected for enhancing various airport services, such as passenger lounges and amenities.

Advocate Kishore Kunal hailed the court's decision as a resolution to a long-standing tax dispute.

While the ruling pertains to the service tax period, it is expected to have implications for the current collection of GST on this fee as well. This verdict provides clarity and relief to private airport developers and highlights the importance of the tax circular in exempting the UDF from service tax.

In a significant ruling, the Supreme Court has provided relief to private airport developers by stating that they are not obligated to pay service tax on the user development fee (UDF) charged to passengers for the operation, maintenance, and development of Mumbai, Delhi, and Hyderabad international airports. The court's decision takes into account a 2006 tax circular that clarifies that amounts collected as taxes, sovereign or statutory dues are exempted from service tax. A bench led by Justice S Ravindra Bhatt, while dismissing appeals by the goods and services tax (GST) authorities, emphasised that the UDF is a statutory levy, despite the absence of a requirement to impose the development fee or deposit it in the government treasury. Previously, the customs, excise, and service tax appellate tribunal (CESTAT) had allowed appeals, stating that the development fee collected by the three airport operators was not subject to service tax. The revenue department, which had imposed tax demands and penalties on the development fee, approached the Supreme Court, arguing that the UDF constitutes an amount collected for enhancing various airport services, such as passenger lounges and amenities. Advocate Kishore Kunal hailed the court's decision as a resolution to a long-standing tax dispute. While the ruling pertains to the service tax period, it is expected to have implications for the current collection of GST on this fee as well. This verdict provides clarity and relief to private airport developers and highlights the importance of the tax circular in exempting the UDF from service tax.

Next Story
Infrastructure Urban

3i Infotech Reports Rs 7.25 Bn Revenue for FY25

3i Infotech, a leading provider of digital transformation, technology services and technology solutions, announced its consolidated financial results for the fourth quarter and full year FY25, ended on March 31st, 2025. The company maintained its growth momentum, displaying consistent progress for the 3rd consecutive quarter.In Q4 FY25, 3i Infotech reported revenue of Rs 1.87 billion, reflecting steady performance compared to Rs 1.81 billion in Q3 FY25 and Rs 1.97 billion in Q4 FY24. The company delivered strong profitability improvements, with gross margin growing by 14.8 per cent Q-o-Q and 1..

Next Story
Infrastructure Urban

Emerald Finance Joins Baya PTE to Boost SME Bill Discounting

Emerald Finance is a dynamic company offering a spectrum of financial products and services including its flagship Earned Wage Access (EWA) in India, has entered into a strategic partnership with Singapore-based Baya PTE through its Indian subsidiary. This collaboration aims to strengthen bill discounting services for Small and Medium Enterprises (SMEs), enabling faster access to working capital and improved cash flow management.The initiative is designed to support SMEs that supply to large corporates such as JSW Steel, Delhivery, and PVR INOX, among others. By facilitating timely invoice dis..

Next Story
Infrastructure Urban

BLS E-Services Crosses Rs 5 Bn Revenue Mark in FY25

BLS E-Services, a technology-enabled digital service provider, announced its audited consolidated financial results for the quarter and full year period ended 31 March 2025.Speaking about the performance and recent updates, Shikhar Aggarwal, Chairman, BLS E- Services said, “We are delighted to report a remarkable performance in FY25, as we achieved several milestones during the fiscal year. FY25 marked our highest-ever financial performance, as we surpassed Rs 5 billion milestone in Total Income during the year, which was reported at Rs 5.45 billion, a notable YoY growth of 76 per cent. The ..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?