Short Overview: Passenger service fee was a statutory levy and assessee airline was only acting as a conduit between embarking passengers and the Central Government Agency, therefore, assessee was not required to deduct tax under section 194J from payment of passenger service fee.

Assessee, an airline company made payment of passenger service fee (‘PSF’) collected by it from embarking passengers to various airports/authorities. AO treated the assessee as one-in-default under section 201(1) for non-deduction of tax under section 194J.

It is held that Passenger service fee was a statutory levy and assessee airline was only acting as a conduit between embarking passengers and the Central Government Agency, therefore, assessee was not required to deduct tax under section 194J from payment of passenger service fee.

Decision: In assessee’s favour.