Legal Review and Analysis of Airports Authority of India vs Commissioner of Service Tax 2025 INSC 1141

1. Name of the Judgment

Airports Authority of India vs. Commissioner of Service Tax
Citation: 2025 INSC 1141, Civil Appeal No. 17405 of 2017
Court: Supreme Court of India
Decided on: September 23, 2025
Judges: Justice Pankaj Mithal, Justice Prasanna B. Varale

2. Related Laws and Sections

The judgment primarily interprets the following statutory provisions under the Finance Act, 1994 (as applicable during the relevant period):

• Section 65 – Definitions
  Sub-section (23): Definition of “cargo handling service” – includes loading, unloading, packing, unpacking, but excludes handling of export cargo.
  Sub-section (105): Definition of “taxable service” – includes sub-clause (zzm), which covers any service provided by the Airports Authority in an airport or civil enclave.

• Section 66 – Charging section for service tax; levies tax on taxable services referred to in various sub-clauses, including (zzm).

3. Basic Judgment Details

• Appellant: Airports Authority of India (AAI)

• Respondent: Commissioner of Service Tax, Delhi

• Period in Dispute: 01.10.2003 to 31.03.2007

• Tax Categories Involved:
  Up to 09.09.2004: Storage and Warehousing Service
  From 10.09.2004: Airport Services (under Section 65(105)(zzm))

• Tribunal Order Appealed: CESTAT order dated 01.03.2017, which confirmed service tax liability under “Airport Services” from 10.09.2004.

4. Core Principle of the Judgment

Issue Before the Court

Whether the services provided by the AAI in handling export cargo at airports are exempt from service tax in view of the exclusion of “handling of export cargo” from the definition of “cargo handling service” under Section 65(23) of the Finance Act, 1994.

Appellant’s Contention

The AAI argued that handling export cargo is explicitly excluded from the definition of “cargo handling service” under Section 65(23), and therefore, it should not be treated as a taxable service.

Supreme Court’s Analysis and Reasoning

The Court drew a clear distinction between definitions and charging provisions:

• Section 65 is a definition section – it defines terms but does not levy tax.

• Section 66 is the charging section – it imposes tax on “taxable services” as defined under Section 65(105).

The Court emphasized that sub-clause (zzm) of Section 65(105) is widely worded and covers any service provided by the AAI in an airport or civil enclave.
The exclusion of export cargo handling from “cargo handling service” under Section 65(23) does not automatically exclude it from the scope of “taxable service” under Section 65(105)(zzm).

Key Legal Interpretation

• The definition of “taxable service” under Section 65(105)(zzm) is independent and broader than the definition of “cargo handling service”.

• The introduction of sub-clause (zzm) w.e.f. 10.09.2004 brought all services provided by AAI at airports under the tax net, irrespective of whether they are excluded from other specific service categories.

Final Outcome

The Supreme Court dismissed the appeal and upheld the service tax liability on AAI for handling export cargo under the category of “Airport Services” from 10.09.2004.

5. MCQs Based on the Judgment

Q1. According to the Supreme Court in Airports Authority of India vs. Commissioner of Service Tax, why was the handling of export cargo by AAI considered a taxable service even though it was excluded from the definition of “cargo handling service”?

A) Because the handling of export cargo was specifically included under “Storage and Warehousing Service”.
B) Because the exclusion under Section 65(23) did not apply to services falling under Section 65(105)(zzm).
C) Because the CESTAT had misinterpreted the circulars issued by the Service Tax Department.
D) Because the AAI had voluntarily registered for service tax payment.

Correct Answer: B) Because the exclusion under Section 65(23) did not apply to services falling under Section 65(105)(zzm).

Q2. From which date did the Supreme Court confirm the levy of service tax on services provided by AAI in handling export cargo under the category “Airport Services”?

A) 01.10.2003
B) 10.09.2004
C) 17.03.2010
D) 31.03.2007

Correct Answer: B) 10.09.2004