2019 (1) TMI 183 - AT - Service Tax

Classification of service - convention service or Hotel and Fitness Services - Further, the Revenue entertained a view that the appellants are engaged in providing the services under the category of Convention Services and are evading the payment of service tax - Held that - The appellant is running an international golf resort and star hotel with various facilities and these rooms are let-out to employees of corporates who pay room tariff and use facilities for outing and formal meetings. These corporates are also allowed to use the mandap and conference facilities free of charges on complementary in order to attract customers as was stated by the General Manager Shri Mathew during the course of investigation - further, it is found that appellants have produced the bills which have been issued to various customers during the impugned period and we find that appellants have not charged any tariff for conference halls and they have only charged for renting of the rooms. Further, we find that the hotels are totally kept out of renting of immovable property service by Section 65(105)(zzzzw) vide Explanation 1(d) which excluded building used for the purpose of accommodation including hotels/hostels, etc. The Hon ble High Court of Delhi and Kerala in various decisions have held that levy was covered by Entry 62 of List II of VII Schedule of the Statute relating to luxury tax which the appellants are paying in the present case - Revenue has not been able to bring on record any evidence to show that the appellants are charging service tax on convention service. The impugned order is not sustainable in law - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of service tax under 'Convention Services' category for the period from 1.4.2002 to 31.8.2006, imposition of penalties, and interest under Section 73(2) and Section 75, 76, 77, 78 of the Finance Act.

Analysis:
The appellant, a unit of Chamundeswari Build Tech Pvt. Ltd., operates a golf resort with various facilities, registered under 'Club and Association Service.' The dispute arose when the Revenue alleged that the appellant was providing 'Convention Services' and evading service tax. The investigation included statements from the General Manager and clients, leading to a show-cause notice in August 2007. The Commissioner confirmed the demand, penalties, and interest, prompting the appeal.

The appellant argued that during the relevant period, no service tax was levied on room tariffs, which only became taxable post an amendment in 2011. They cited legal precedents where similar levies were struck down, emphasizing that the activities fell under State Legislation and were not subject to service tax. The appellant also highlighted circulars issued post the 2011 amendment, supporting their position that the impugned order was contrary to law.

The Tribunal analyzed the appellant's activities, noting that rooms were let out to corporates with charges for rooms only, not conference halls. Legal precedents were cited to support the view that VAT and luxury tax on food and beverages indicated separate activities not subject to service tax. The Tribunal upheld the view that the charges for food and beverages were ancillary to the primary activity of convention service, aligning with previous decisions and legal principles.

In conclusion, the Tribunal found no merit in the Revenue's appeal, dismissing it and setting aside the impugned order. By following legal precedents and considering the specific circumstances of the case, the Tribunal ruled in favor of the appellant, allowing the appeals with consequential relief.