The OMDA did not constitute a franchise as defined in the Finance Act, and the transaction did not fall within the taxable service category of 'Franchise Services'.

SANJEEV SACHDEVA, J.

1. These petitions inter-alia seek the relief of declaration that the provisions of Section 65(90a) and Section 65(105)(zzzz) of the said Finance Act, 1994 as amended by Finance Act, 2007 are ultra-vires Entry 18 Entry 45 and Entry 49 of List-II of Schedule VII of the Constitution of India and/or Entry 92-C read with Entry 97 of List-I of Schedule VII of the Constitution of India and/or Articles 14, 19(1)(g), 265 and 300A of the Constitution of India and/or Section 66 of the Finance Act, 1994;

2. Further a Writ of Prohibition is sought, prohibiting the Respondents or their servants, agents and subordinates from, directly or indirectly giving effect to the impugned provisions i.e. Section 65(90a) read with Section 65(105)(zzzz) of the Finance Act, 1994 as amended by Finance Act, 2007 and from charging and collecting Service Tax on the Annual Fee payable by the Petitioners (i.e. Delhi International Airport P. Ltd. {DIAL for short}, petitioner in W.P. (C) 2516/2008 & Mumbai International Airport P. Ltd {MIAL for short}, petitioner in W.P. (C) 2707/2008) to the Respondent no.4 (Airports Authority of India {AAI for short});

3. Further, quashing and setting aside of the adjudication order, being Order-In-Original No. DEL-SVTAX-ADJ-COM-035 to 038-13-14 dated 26.03.2014, to the extent it holds that benefit of CENVAT Credit is not available to the service recipient and confirms the demand of tax under Section 65 (47) of the Finance Act, 1994 under the entry “Franchise service”, is sought. "

4. Restrain is also sought against the Respondents from levying and recovering Service Tax under the impugned provision viz. Renting of Immovable Property Service and/or Franchise Services on the annual fees or any interest and/or penalty consequential thereto.

5. It may be pertinent to note, at this point, that the Respondent No. 4 Airports Authority of India (hereinafter referred to as AAI) had treated the Annual fee paid by the petitioners to AAI as chargeable to service tax under the taxing entry “Renting of Immovable Property Services”. Respondent No. 1 to 3 (the Revenue Department), in its counter affidavit and also in the impugned Order in Original, has taken the stand that the upfront fee and Annual Fee is exigible to service tax under the taxing entry “Franchise Service”.

BRIEF FACTS

6. Under the Airports Authority of India Act, 1994 it is the responsibility of the AAI to develop, operate, manage and maintain airports in India in addition to maintaining related facilitation of air traffic control, and, other allied issues.

7. Under a policy decision of the Government of India to privatise the Airports for their better management, the AAI issued Request for Proposals (RFP for short) offering a long term Operations, Management and Development Agreement (OMDA for short) to suitably qualified, experienced and resourced parties to design, construct, operate, maintain, upgrade, modernize, finance, manage and develop the Delhi and Mumbai Airports with an intention to provide world class airport management at both these airports.

8. The consortium led by the GMR Group was selected by the AAI as the successful bidder to design, construct, operate, maintain, upgrade, modernize, finance. manage and develop the Delhi airport and the consortium led by the GVK Group was selected by the AAI as the successful bidder to design, construct, operate, maintain, upgrade, modernize, finance. manage and develop the Mumbai airport.

9. As per the policy decision of the Government of India and in terms of the respective OMDAs, both dated 04.04.2006, executed between the AAI and the Petitioners, the Petitioners have been granted the exclusive right and authority to undertake some of the functions of the AAI being the functions of operation, maintenance, development, design, construction up gradation, modernization, finance and management of the respective Airports.

10. Article 2.1.1 of the OMDA reads as under:

“AAI hereby grants to the JVC, the excl