2018 (6) TMI 931 - AT - Service Tax

Convention Service - liability of service tax - complimentary convention facility being provided along-with renting of room service - benefit of N/N. 1/2006-ST dated 01.06.2006 as amended - Held that - The appellants are not engaged in providing any Convention Service. The appellant had rented room and has discharged service tax liability whenever the service tax is applicable. Further, no separate charges for Convention Center have been charged and the use has been complementary. The demand has been computed on notional basis - since use of convention room is complementary therefore no service tax can be charged on the same. Demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant is liable to pay service tax on charges collected for convention services provided?
2. Whether the demand for service tax along with penalties imposed on the appellant is justified?
3. Whether the use of convention room being complimentary exempts the appellant from paying service tax?

Analysis:

Issue 1: Liability for Service Tax on Convention Services
The case involved the appellant being issued show cause notices (SCNs) alleging that they were providing "Convention Services" and charging customers for services like room rent, food, beverages, and other facilities. The SCNs proposed demanding service tax for the period from 2006-07 to 2009-10 and from April 2012 to September 2012. The Commissioner Central Excise and Deputy Commissioner confirmed the demand and imposed penalties. However, the Commissioner (Appeals) held that since the services provided included catering, abatement under a specific notification would be applicable. The appellant contested these decisions in the present appeals.

Issue 2: Justification of Demand and Penalties
The appellant argued that they were engaged in providing various taxable services, including event management, real estate, beauty parlour services, and more. They owned a hotel with facilities like sightseeing and conference rooms, which were provided complimentary to customers. The appellant contended that no separate charges were collected for the conference hall usage, and thus, no service tax was payable. The appellant highlighted sample contracts showing billing based on occupancy and additional conference hall facilities provided. The appellant claimed that the demand was arbitrary and not based on actual charges collected for services.

Issue 3: Complimentary Use of Convention Room and Service Tax Liability
After reviewing the case records and submissions, the Tribunal found that the appellant was not providing Convention Services. The Tribunal noted that the appellant did not charge separate amounts for the convention center usage, and it was provided complimentary to customers. The demand for service tax was deemed to be computed on a notional basis. Relying on previous Tribunal judgments, the Tribunal concluded that since the use of the convention room was complimentary, no service tax could be charged. Consequently, the Tribunal set aside the impugned order and allowed both appeals with consequential reliefs.

In conclusion, the Tribunal held that no demand could be made against the appellant as they were not liable to pay service tax on the complimentary use of convention room facilities. The judgment emphasized the importance of actual charges collected and the nature of services provided in determining service tax liability, ultimately ruling in favor of the appellant.