New Delhi, Sept. 23 -- In a setback for the Airports Authority of India (AAI), the Supreme Court on Tuesday upheld a service tax demand of Rs.8.59 crore on fees collected by the airport regulator from airlines, cargo operators, and exporters between 2003 and 2007.

A two-judge bench, comprising Justices Pankaj Mithal and Prasanna B. Varale, dismissed AAI's appeal, affirming a 2017 ruling by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Delhi that previously upheld the tax demand.

"We are of the opinion that the authorities below have not erred in taxing the services rendered by the appellant in relation to export cargo as taxable service. The appeal as such lacks merit and is accordingly dismissed," the court said.

The...