The Hon’ble Supreme Court in the case of Airports Authority of India v. Commissioner of Service Tax [Civil Appeal No. 17405 of 2017, order dated September 23, 2025] held that export cargo handling services provided by the Airports Authority of India are taxable under Section 65(105)(zzm) read with Section 66 of the Finance Act, 1994, regardless of the exclusion available under Section 65(23).
Facts:
Airports Authority of India (‘the Petitioner’) is a government organization managing various airports in India and registered with the Service Tax Department.
Commissioner of Service Tax, Delhi (‘the Respondent’) confirmed service tax liability for the Petitioner for the period October 1, 2003 to March 31, 2007 and up to September 9, 2004 under “Storage and Warehousing Service” and thereafter under “Airport Services”.
The Petitioner contended that all impugned services pertained to handling export cargo, which is expressly excluded from the taxable category “Cargo Handling Service” under Section 65(23) and should not be subject to service tax.
The Respondent contended that post-September 10, 2004, all services provided by Airports Authority fall under “Airport Services” due to insertion of Section 65(105)(zzm), which overrides the exclusion under Section 65(23).
The Petitioner, aggrieved by concurrent findings of the adjudicating authority and the CESTAT, approached the Supreme Court by way of an appeal under Section 35L of the Central Excise Act, 1944.
Issue:
Whether handling of export cargo by Airports Authority of India within the airport premises is exempt from service tax owing to the exclusion under Section 65(23) of the Finance Act, 1994, or is taxable by virtue of Section 65(105)(zzm) read with Section 66.?
Held:
The Hon’ble Supreme Court in Civil Appeal No. 17405 of 2017 held as under:
- Observed that, Section 65(23) only defines cargo handling services and specifically excludes handling of export cargo but does not confer exemption from service tax.
- Noted that, Section 66 is the charging provision, and Section 65(105)(zzm) (introduced on September 10, 2004) defines “Airport Services” to include any service provided by Airports Authority of India within airport premises, capturing all types of services regardless of export nature.
- Held that, the statutory exclusion under Section 65(23) applies only to the specific definition of “Cargo Handling Services” and not to the independently chargeable head of “Airport Services.”
- Noted that, circulars relied upon by the Petitioner could not override express statutory provisions.
- Held that, the services rendered by Airports Authority in handling export cargo are taxable under Section 65(105)(zzm) read with Section 66 as “Airport Services” from September 10, 2004, and exclusion in Section 65(23) does not control the charging mechanism and the appeal was dismissed as lacking merit.
Our Comments:
The Hon’ble Supreme Court cited and reaffirmed past jurisprudence that circulars (Circular No. 80/10/2004-ST dated September 17, 2004) are not binding when in conflict with statutory text. Administrative instructions thus cannot create, expand, or restrict liability contrary to Parliament’s intent.
Relevant Provisions:
Section 65(23) of the Finance Act, 1994:
“(23) Cargo handling service means loading, unloading, packing or unpacking of cargo and includes,—
(a)cargo handling services provided for freight in special containers or for non containerised freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport, and cargo handling service incidental to freight; and
(b) service of packing together with transportation of cargo or goods, with or without one or more of other services like loading, unloading, unpacking, but does not include, handling of export cargo or passenger baggage or mere transportation of goods;”
Section 65(105)(zzm) of the Finance Act, 1994:
“”taxable service” means any service provided or to be provided,-
(a) to any person, by a stock-broker in connection with the sale or purchase of securities listed on a recognized stock exchange;
(b) (Omitted)
(c ) (Omitted)
(d) to a policy holder or any person, by an insurer, including re-insurer carrying on general insurance business in relation to general insurance businesses;
(e) to any person, by an advertising agency in relation to advertisement, in any manner; (f) to any person, by courier agency in relation to door-to-door transportation of time-sensitive documents, goods or articles;
(g) to any person, by a consulting engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering including the discipline of computer hardware engineering.
Explanation.— For the purposes of this sub-clause, it is hereby declared that services provided by a consulting engineer in relation to advice, consultancy or technical assistance in the disciplines of both computer hardware engineering and computer software engineering shall also be classifiable under this sub-clause;
(h) to any person, by a custom house agent in relation to the entry or departure of conveyances or the import or export of goods;
(i) to a shipping line, by a steamer agent in relation to a ship’s husbandry or dispatch or any administrative work related thereto as well as the booking, advertising or canvassing of cargo, including container feeder services;
(j) to any person, by a clearing and forwarding agent in relation to clearing and forwarding operations, in any manner;
(k) to any person, by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner;
‘Explanation.—For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, recruitment or supply of manpower includes services in relation to pre-recruitment screening, verification of the credentials and antecedents of the candidate and authenticity of documents submitted by the candidate;..”
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