2023 (12) TMI 909 - AT - Service Tax

Levy of Service Tax - Restaurant Service - rendering Mandap Keeper Service, Cab Operator Service and Business Auxiliary Service - Department was of the view that the respondent was liable for registration and payment of Service Tax on Restaurant Services provided in respect of food and beverages, including alcoholic beverages or both, in their premises - exemption under Notification No. 25/2012-ST dated 20.06.2012. HELD THAT - As the restaurants though located in the premises of Hotel Sangam in Trichy and Thanjavur, they are clearly demarcated from the permit room and these restaurants are separately named and the service activities in the restaurants are not linked to the service activities in the permit room or bar. As the restaurants located in the premises of Hotel Sangam in Trichy and Thanjavur, do not fulfil the requirement of having a licence to serve alcoholic beverages, the services provided in the restaurant does not come under the ambit of Restaurant Services . The basic premise of the Show Cause Notice for demanding Service Tax from the appellant is that the services from the restaurant are located within the premises of the hotel and the hotel has a licence to serve liquor, hence, the restaurant fulfills the requirements under the category of Restaurant Services is not legally correct and this inconsistent interpretation has to be discarded. The term establishment as figuring in the definition under Section 65(105)(zzzzv) has been referred to as the Hotel in whose premises the restaurant is located and not for the Restaurant . As such, the restaurants located in the appellant s premises both at Trichy and Thanjavur have not satisfied one of the conditions of serving alcoholic beverages and so the Service Tax liability cannot be fastened in respect of restaurant service on the appellant. As held by the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS M/S RATAN MELTING WIRE INDUSTRIES 2008 (10) TMI 5 - SUPREME COURT , the Department Circulars and instructions are binding on the Revenue authorities under the respective statutes and as such, in view of the express clarification issued vide Circular No. 139/8/2011-TRU dated 10.05.2011, the impugned order could not have been challenged by filing an appeal by the Department as in doing so, it goes against the Circular issued by the Board. The contentions advanced on behalf of the Department are without substance as the Circulars / Notifications ibid do not run contrary to the provisions of the Act - there is no reason to differ with the Order-in-Original No. 06/2014- ST dated 20.02.2014 passed by Commissioner of Central Excise and Service Tax, Trichy - As the demand cannot sustain, there is no need to discuss about the invocation of extended period in this appeal. The impugned order does not call for any interference - the Department s appeal stands dismissed.

Summary

Issues Involved:
1. Whether the activity rendered by the Respondent qualifies for demand of Service Tax under 'Restaurant Service' in terms of provisions of Section 65(105)(zzzzv) of the Finance Act, 1994, up till 30.06.2012?
2. Whether the appellant is eligible for exemption under Notification No. 25/2012-ST dated 20.06.2012, which is effective from 01.07.2012 and also applicability of the clarification issued vide Circular No. 139/8/2011-TRU dated 10.05.2011?

Summary:

Issue 1: Qualification for Service Tax under 'Restaurant Service' up till 30.06.2012
The Department issued a Show Cause Notice to the Respondent demanding Service Tax of Rs.73,80,436/- on 'Restaurant Services' for the period from 01.05.2011 to 31.12.2012, invoking proviso to Section 73(1) of the Finance Act, 1994. The adjudicating authority dropped the proceedings on the grounds that the essential conditions stipulated under Section 65(105)(zzzzv) of the Finance Act, 1994 were not met, and the Respondent became eligible for exemption under Sl.No. 19 of Notification No. 25/2012-ST dated 20.06.2012. The Tribunal found that the Respondent's restaurants did not fulfill the requirement of having a licence to serve alcoholic beverages in the premises of the restaurant, thus not falling under the ambit of 'Restaurant Services' for the period from 01.05.2011 to 16.03.2012.

Issue 2: Eligibility for Exemption under Notification No. 25/2012-ST and Applicability of Circular No. 139/8/2011-TRU
The Tribunal examined the legal provisions and found that the Respondent's restaurants, though located within the hotel premises, were clearly demarcated from the permit rooms (bars) and did not have licences to serve alcoholic beverages. The Circular No. 139/8/2011-TRU dated 10.05.2011 clarified that Service Tax is leviable only if both conditions of having air-conditioning and a licence to serve alcoholic beverages are met. Since the Respondent's restaurants did not meet these criteria, they were eligible for exemption under Notification No. 25/2012-ST. The Tribunal held that the Department's interpretation was inconsistent with statutory provisions and clarifications issued by the Board.

Conclusion:
The Tribunal upheld the Order-in-Original No. 06/2014-ST dated 20.02.2014, dismissing the Department's appeal and concluding that the Respondent's restaurants were not liable for Service Tax under the category of 'Restaurant Services' for the disputed period. The Tribunal emphasized that Department Circulars and instructions are binding on Revenue authorities, and the impugned order could not have been challenged as it aligned with the Circular issued by the Board. The appeal was dismissed, and the impugned order was affirmed.