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2019 (7) TMI 1679 - AT - Service TaxCENVAT Credit - demand of service tax alongwith interest and penalty - restaurant services - short term accommodation services - contravention of Section 68 of Finance Act read with Rule 6 of Service Tax Rules 1994 read with Notification No. 1/2006-ST dated 1.3.2006 as amended by Notification No. 34/2011-ST dated 24.4.2011. Abatement as per Notification No. 1/2006-ST - proportionate credit - Rule 6(3D) of the Cenvat Credit Rules - HELD THAT - The issue decided in their own case M/S THE OBEROI RAJVILAS, M/S TRIDENT, M/S OBEROI VANYAVILAS VERSUS CCE, JAIPUR 2018 (5) TMI 1715 - CESTAT NEW DELHI where it was held that the procedure prescribed in Rule 6(3A) of the Credit Rules is only to make the provisions of Rule 3 workable. By means of proportionate reversal the requirement of Rule 6(3) has been substantially satisfied. This is also provided in Rule 6(3D) of the Cenvat Credit Rules which was introduced at a later date - benefit of abatement cannot be denied - demand do not sustain. Demand of service tax under restaurant service for mini bar - HELD THAT - The activity per se is not a service as the customers provides services to themselves after paying the applicable VAT. Therefore the demand on this score is not sustainable. Payment of service tax in respect of health club and finance service dry cleaning etc. - demand has been raised merely on the basis of value as reflected in the balance sheet as compared with the ST returns - HELD THAT - The appellant has extended various count of discount to their customers which would definitely not with value of such services placing reliance on the decision of Bhayana Builders (P) Ltd 2018 (2) TMI 1325 - SUPREME COURT . The discount has been clearly and correctly reflected in their ledger account for the impugned period however same has not been taken into account while issuing the show cause notice or confirmation the demand - We are in agreement with the submission of learned Advocate that the discount is clearly mentioned in the ledger account as at page 20-58 of appeal paper book. Also, the appellant is entitled for the exemption as contained in Notification No. 14/2008 for providing the exemption paying to the foreign based service provider and travel agent - there is no justification of levying service tax on this service and the same accordingly, not sustainable. Demand on tour operator service - HELD THAT - The activities being undertaken by the appellant is not falling within the ambit of tour operator service which has two parts. First part covers person who is engaged in the business of planning, scheduling, organising or arranging tours and the second part covers any person operating tour in tourist vehicle having permit granted under Motor Vehicle Act/Rule. The appellant has only provided pick up and drop facility for elephant ride up to Kanota dam. This, therefore, cannot be treated as tour operator service as per the definition of service under the Act. The appellant is not engaged in business of operating tour and is recognised as luxury hotel and has not tour operator, therefore, demand is not sustainable. Extended period of Limitation - HELD THAT - The same is merely on the basis of non production of document by the appellant before the adjudicating authority and the appellate authority. It has been brought to our notice that these documents were in fact produced by the appellant before the lower authorities. However, the same has not been considered by them - demand pertaining to the Cenvat credit is also not sustainable and liable to be set aside. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Service tax under restaurant service for pool side. 2. Service tax under restaurant for mini bar service. 3. Service tax under health club and fitness service. 4. Service tax under dry cleaning services. 5. Service tax under business auxiliary services. 6. Service tax under tour operator service. 7. Service tax in respect of unspecified services. 8. Admissibility of Cenvat credit. 9. Invocation of extended period of limitation. Detailed Analysis: 1. Service Tax under Restaurant Service for Pool Side: The appellant contended that the pool side restaurant is a non-air-conditioned restaurant and thus not liable for service tax. The Tribunal agreed, referencing Section 65(105)(zzzzv) of the Act and CBEC Circulars, which stipulate that only air-conditioned restaurants serving alcoholic beverages are taxable. The Tribunal found no justification for the demand on this count. 2. Service Tax under Restaurant for Mini Bar Service: The appellant argued that mini bar services constitute a sale transaction without a service component, as it involves self-service by customers who pay applicable VAT. The Tribunal concurred, stating that the activity per se is not a service, and thus the demand was not sustainable. 3. Service Tax under Health Club and Fitness Service, Dry Cleaning Services, and Business Auxiliary Services: The demand was based on discrepancies between the value in the balance sheet and ST-3 returns. The appellant provided discounts, which were not considered in the demand. The Tribunal, referencing the decision in CST Vs. Bhayana Builders (P) Ltd., held that discounts should be accounted for, and thus the demand was not sustainable. 4. Service Tax under Tour Operator Service: The appellant provided pick-up and drop facilities for elephant rides, which they argued did not constitute tour operator services. The Tribunal agreed, noting that the appellant did not engage in planning or operating tours as defined under the Act. Therefore, the demand was not sustainable. 5. Service Tax in Respect of Unspecified Services: The demand included amounts for unspecified services under Notification No. 14/2008-ST, which the appellant contended was inapplicable. The Tribunal found that the appellant was entitled to exemption for services provided by foreign-based service providers and travel agents, thus nullifying the demand. 6. Admissibility of Cenvat Credit: The Tribunal found that the appellant had proportionately reversed credit on common input services, satisfying the requirements of Notification No. 1/2006-ST. The demand for irregular Cenvat credit was based on non-production of documents, which the appellant claimed were submitted but not considered. The Tribunal accepted the appellant's contention and set aside the demand. 7. Invocation of Extended Period of Limitation: The Show Cause Notice was issued invoking the extended period on grounds of evasion and wrongful credit. The Tribunal noted that the appellant's returns were audited by the Department, and the issues involved complex interpretations of law. Citing the Supreme Court decision in Pushpam Pharmaceutical Company, the Tribunal found no justification for invoking the extended period. Conclusion: The Tribunal allowed the appeal, setting aside the impugned order, and found that the demands for service tax and Cenvat credit were not sustainable. The invocation of the extended period of limitation was also deemed unjustified.
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