2017 (1) TMI 38 - AT - Service Tax

Convention services - whether room rent to be included in assessable value - Held that - providing of rooms on rent is a distinct, separate and independent activity, which has no relation to the convention service. Further giving the room on rent cannot be considered as a part of convention service - room rent need not be added. Whether the value of meals and beverages supplied to the participants of the conference is to be included in the value of the conventional services? - Held that - It is on record that such charges alongwith the room rent have been indicated separately in the bills. It is also on record that the respondent has been paying VAT to the State Government on sale of food and beverages to the customers as indicated in the bills raised by them. It is a settled position of law that two taxes i.e. VAT and Service Tax cannot be levied on the same value - the supply of food and beverages is not an activity ancillary to the primary activity of convention service - value of food items need not be added. Appeal dismissed - decide against Revenue.

Summary

Issues:
1. Whether the value of room rent provided along with convention services is subject to service tax?
2. Whether the value of meals and beverages supplied to participants of a conference should be included in the value of convention services for the purpose of service tax?

Analysis:

Issue 1:
The appeal was filed by Revenue against an order-in-appeal passed by the Commissioner (Appeals), Jaipur. The respondent was providing taxable services falling under convention services. The Revenue claimed that the appellant had not paid service tax on the value realized for providing food and room rent from participants. The Commissioner (Appeals) set aside the demand, stating that room rent is a distinct activity not related to convention services. The Tribunal upheld this view, noting that the respondent paying luxury tax separately on room rent supports the argument that it is an independent activity. The Tribunal agreed with the Commissioner (Appeals) that room rent should not be added to the value of convention services for service tax purposes.

Issue 2:
Regarding the value of meals and beverages supplied, the Commissioner (Appeals) found that these charges were separate in bills and the respondent paid VAT on them to the State Government. The Tribunal agreed that the supply of food and beverages is not ancillary to convention services and should not be included in the value for service tax. Citing a previous Tribunal decision, the Tribunal supported the exclusion of food and beverage costs from the value for service tax under convention services. The Tribunal noted that VAT and Service Tax cannot be levied on the same value. Therefore, the Tribunal dismissed the Revenue's appeal, stating that the charges for meals and beverages should not be included in the value of convention services for service tax purposes.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the decisions of the Commissioner (Appeals) regarding both the value of room rent and meals/beverages supplied in connection with convention services.