2014 (10) TMI 872 - AT - Service Tax

Renting of immovable property - leasing/renting of immovable property for a hotel - Held that - the issue is no more res integra and the Tribunal in the case of Jai Mahal Hotels Private Limited Vs. CCE 2014 (7) TMI 540 - CESTAT NEW DELHI has held that leasing/renting of immovable property for a hotel is expressly excluded from the ambit of the taxable service under Section 65(105)(zzzz). - appellants were under no tax liability for payment of service tax on the said activity. Renting of another premises - assessee treated the entire consideration, as cum-tax - Held that - Original Adjudicating Authority directed to examine and verify the above ledger and their claim that the tax amount has not been given to them by their customers and to re-decide the issue accordingly - matter remanded back.

Summary

Issues:
1. Service tax liability on renting of immovable property for hotel use.
2. Discharge of tax liability on renting of immovable property and treatment of consideration as cum-tax.

Analysis:
1. The appellants, owners of hotel buildings rented to a hotel company, were facing service tax proceedings initiated by the Revenue. The issue was whether they were obligated to pay service tax on renting of immovable property. Referring to a previous case, the Tribunal held that leasing/renting of immovable property for a hotel is excluded from taxable services under Section 65(105)(zzzz). Consequently, the Tribunal ruled that the appellants had no tax liability for service tax on the activity.

2. Apart from the above issue, there was an additional demand in another case related to renting of immovable property for another premises. The appellants had discharged their tax liability on this activity but treated the entire consideration as cum-tax. The Revenue contended that the cum-tax benefit should not be available to the appellants since they had claimed tax from their customers. The appellants argued that although they received the tax amount from customers, they had not paid it, as evidenced by their ledger. The Tribunal remanded the matter to the Original Adjudicating Authority to examine the ledger and verify the claim that the tax amount had not been received from customers, instructing a re-decision based on the findings.

In conclusion, the Tribunal ruled in favor of the appellants regarding the service tax liability on renting of immovable property for hotel use. However, a separate issue arose concerning the treatment of consideration as cum-tax, which required further verification based on the appellants' ledger.