9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (5) TMI 808 - AT - Service TaxLevy of service tax - Room Charge Retention on cancellation of accommodation by their customers during the years 2012-13 to 2015-16 - Revenue contended that the amount retained was not for provision of 'Short-term Accommodation Service', as no service whatsoever has been provided by the appellant to the customers for the income so earned - Declared Service as per clause (e) of Section 66E of the Finance Act, 1994 or not - HELD THAT - The amounts retained by the appellant from the advances received for the provision of the taxable service on cancelation of the agreement to provide the service, are to be taxed under the same category of the taxable service which was agreed to be provided, the consideration for the same would be the amount retained and the service tax shall be payable on the value determined taking the said amount as the value of the service to be provided. The issue involved in the present case is no longer res-integra. The issue is squarely covered by the decision of this Delhi Bench in the case of M/S LEMON TREE HOTEL VERSUS COMMISSIONER, GOODS SERVICE TAX, CENTRAL EXCISE CUSTOM 2019 (7) TMI 767 - CESTAT NEW DELHI it was held that the retention amount (on cancellation made) by the appellant does not undergo a change after receipt and no service tax is attracted under the provisions of Section 66 E(e) of the Finance Act. CBIC has vide Circular No 178/10/2022-GST dated 3- 08.2022 clarified that amount forfeited in the case of non - refundable ticket for air travel or security deposit or earnest money forfeited in case of the customer failing to avail the travel, tour operator or hotel accommodation service or such other intended supplies should be assessed at the same rate as applicable to the service contract, say air transport or tour operator service, or other such services. Admittedly appellant has paid service tax on the room retention charges collected by them on cancellation of the booking by availing the exemption/ abatement as per notification No 26/2012-ST treating them as Short term accommodation services - there are no merits in the impugned order - appeal allowed.
Issues Involved:
1. Denial of exemption under Notification No. 26/2012-ST for cancellation charges. 2. Classification of cancellation charges as 'Declared Service' under Section 66E(e) of the Finance Act, 1994. 3. Applicability of Service Tax on the full value of cancellation charges without abatement. 4. Invocation of extended period of limitation and imposition of penalties under Section 78 of the Finance Act, 1994. 5. Entitlement to cum-tax benefit. Detailed Analysis: 1. Denial of Exemption under Notification No. 26/2012-ST: The appellant argued that cancellation charges retained by them should be exempt under Notification No. 26/2012-ST, treating them as 'Short-term Accommodation Services.' However, the Revenue contended that these charges are not for the provision of any service but for tolerating an act or situation, hence falling under 'Declared Services' as per Section 66E(e) of the Finance Act, 1994. The Tribunal referred to the decisions in Lemon Tree Hotel and other cases, concluding that the charges retained for non-occupation of rooms should be treated as part of the accommodation service, thus eligible for the exemption. 2. Classification of Cancellation Charges as 'Declared Service': The Revenue classified the cancellation charges under 'Declared Service' as per Section 66E(e), arguing that the appellant agreed to tolerate the act of non-occupation by customers. The Tribunal, however, found that the cancellation charges were part of the contractual agreement for providing accommodation services and should not be classified separately as 'Declared Service.' This view was supported by previous rulings in cases like Lemon Tree Hotel and M P Poorva Kshetra Vidyut Ltd. 3. Applicability of Service Tax on Full Value Without Abatement: The Revenue's stance was that no abatement should be allowed on cancellation charges, and service tax should be levied on the full value. The Tribunal disagreed, citing the CBIC Circular No. 178/10/2022-GST, which clarified that cancellation charges should be taxed at the same rate as the principal supply. Thus, the appellant's treatment of these charges as part of 'Short-term Accommodation Services' with applicable abatement was upheld. 4. Invocation of Extended Period of Limitation and Imposition of Penalties: The lower authorities invoked the extended period of limitation and imposed penalties under Section 78 of the Finance Act, 1994, for alleged suppression of facts. The Tribunal reviewed the adjudicating authority's findings and upheld the invocation of the extended period and the imposition of penalties, agreeing that there was no disclosure of the correct facts in the ST-3 Returns. 5. Entitlement to Cum-Tax Benefit: The appellant argued for the benefit of cum-tax value, which was denied by the lower authorities. The Tribunal agreed with the adjudicating authority's detailed findings that the appellant was not entitled to cum-tax benefit, thus upholding this part of the impugned order. Conclusion: The Tribunal allowed the appeal, holding that the cancellation charges should be treated as part of the 'Short-term Accommodation Services' and eligible for the exemption under Notification No. 26/2012-ST. The classification of these charges as 'Declared Service' under Section 66E(e) was rejected. However, the invocation of the extended period of limitation and the imposition of penalties were upheld. The appellant's request for cum-tax benefit was denied. The order was pronounced in the open court.
|
