2023 (8) TMI 1049 - AT - Service Tax

Classification of services - Restaurant-cum- Bar Service - air conditioning facility is provided therein or not - Suppression of facts - extended period of limitation - HELD THAT - It is found from the records that subsequent to the inclusion of the services provided by the Restaurant having facility of air conditioning in the service tax net, letter dated 7.9.2012 was issued by the department calling upon the appellant to provide details of Registration Certificate, Bar licence., STR/ Income Tax Returns, bill books and bank account details for the financial year 2011-2012. The appellant in terms of summons dated 19.12.2012 appeared on 28.12.2012 and in his statement recorded under section 14 of the Act, stated that on 8.7.2010 when he obtained Bar licence he was having air conditioning facility in his Restaurant-cum-Bar but air conditioner was removed and instead air cooling facility through air cooler was provided by the end of year 2010 till 31.12. 2012 - it appears that the statement made by the appellant on 28.12.2012 was a mere cover up so as to avoid any service tax liability and there is no substantive proof in support thereof. On the contrary, it is on record that in the initial application made by the appellant on 23.6.2010 for availing the liquor licence the restaurant had air conditioning facility. There is nothing to rebut this documentary evidence and therefore the case of the appellant is not acceptable. The licence is currently valid which means that the appellant is still running the Restaurant-cum-Bar and as per the Restaurant Bar Licence policy and law of State Excise Department the appellant needs to comply with the conditions linked with the grant of licence as well as for the renewal of the licence and one of which is that air conditioning facility is provided therein - there are no perversity in the appreciation of the material on record and therefore, the plea taken by the appellant that they have dispensed with the air conditioning facility is not correct and needs to be rejected. Suppression of facts - extended period of limitation - HELD THAT - The extended period of limitation is clearly applicable as the appellant suppressed the correct fact with regard to the facility of AC being available at the restaurant and mis-represented and misguided the department with the sole intent to evade payment of duty. The intention to evade duty is writ large in the conduct of the appellant and it cannot be said to be a case of bonafide belief of non liability of service tax or a case of ignorance of service tax liability. For the said reasons, penalty under section 77(1)(a), 77(2) and 78 of the Finance Act,1994 are also confirmed. Unless and until, the appellant is able to produce any cogent and substantive evidence in support of his statement that he does not have the AC facility in the restaurant, he is not eligible to claim the benefit of the exemption notification. The burden lies on the appellant to prove his case that he falls under the exemption Notification as there is no AC facility in his restaurant, which he has failed to do. There are no infirmity in the impugned order which is hereby affirmed and the demand of service tax for the period from 01.05.2011 to 31.03.2015 alongwith penalty under Section 77(1)(a), 77(2) and 78 of the Finance Act, 1944 is upheld. Accordingly, the appeal is dismissed.

Issues Involved:
1. Applicability of service tax on services provided by the appellant under the category of "Restaurant-cum-Bar Service".
2. Validity of extended period of limitation for the demand of service tax.
3. Applicability of penalties under Sections 77(1)(a), 77(2), and 78 of the Finance Act, 1994.

Summary:

1. Applicability of Service Tax on "Restaurant-cum-Bar Service":
The primary issue was whether the services provided by the appellant fall under the category of "Restaurant-cum-Bar Service" as defined under Section 65(105)(zzzzv) of the Finance Act, 1994, and whether the appellant is liable to pay service tax. The Tribunal examined the definition clause, which specifies that taxable service includes any service provided by a restaurant with air-conditioning facilities at any time during the financial year and a license to serve alcoholic beverages. The appellant argued that the air-conditioning facility was removed by the end of 2010 and replaced with air coolers. However, the Tribunal found that there was no substantive proof to support this claim. The initial application for the liquor license in 2010 stated that the restaurant was air-conditioned, and no communication was made to the State Excise Department about removing the air-conditioning facility. The Tribunal concluded that the appellant's claim was a cover-up to avoid service tax liability.

2. Validity of Extended Period of Limitation:
The appellant contended that the extended period of limitation should not apply as there was no suppression or willful misstatement of facts with the intent to evade duty. The Tribunal, however, observed that the appellant tried to defraud two revenue departments by violating the conditions of the state excise license and not paying service tax. The Tribunal agreed with the Commissioner (Appeals) that the appellant's actions showed an intention to evade tax liability, thus justifying the extended period of limitation.

3. Applicability of Penalties:
The Tribunal upheld the penalties under Sections 77(1)(a), 77(2), and 78 of the Finance Act, 1994, due to the appellant's suppression of facts and misrepresentation. The Tribunal found that the appellant's conduct indicated a clear intention to evade duty, and it was not a case of bona fide belief or ignorance of service tax liability.

Conclusion:
The Tribunal affirmed the impugned order, upholding the demand for service tax for the period from 01.05.2011 to 31.03.2015, along with penalties under Sections 77(1)(a), 77(2), and 78 of the Finance Act, 1994. The appeal was dismissed.

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