2024 (4) TMI 35 - AT - Service Tax

Levy of service tax - bowling alley income - to be included in the Negative List under section 66D(j) of the Finance Act or not - scope of amusement facility - Extended period of limitation - HELD THAT - Keeping in mind the definition of amusement facility under section 65B(9) of the Finance Act what is included in the Negative List in the context of the present case is access to amusement facilities where fun or recreation is provided by means of bowling alley in amusement parks amusement arcades water parks theme parks or such other places but does not include a place within such facility where other services are provided. The Centre provides recreational facilities to customers by way of offering bowling alley video and other fun games restaurant facility sale of socks and supply of shoes. According to the appellant the aforesaid facilities are independent of each other and are chargeable separately depending on the services being availed by the customers. The appellant further claims that there is a clear demarcation between such recreational facilities and that separate entry/admission fee is not collected for entry into the Centre. The order has disallowed the appellant from being covered under the scope of section 66D(j) of the Finance Act as it provides services other than bowling alley activity also at the Centre. The definition of amusement facility does not disqualify a facility from being covered under its scope only because services other than fun or recreation are provided in any part or place of such facility. The definition only excludes such other places from the scope of amusement facility which means that charges recovered for access to the excluded premises would continue to be taxable. Amusement facility has been defined to mean a facility where recreation or fun is provided by means of bowling alleys. However a place within such facility where services other than bowling alley are provided would not be covered under the definition of amusement facility - The appellant earmarked space for fun or recreation such as bowling alley or video games. In such an area no other services are provided. Further charges to such areas are also separate. Thus provision of access to such a facility (bowling alley) would be covered under the Negative List. The access to an amusement facility would also mean the permission to use such facility against payment of an amount - it has to be held that the income received by the appellant from bowling alley would be covered under section 66D(j) of the Finance Act and therefore would not be leviable to service tax. Extended period of limitation - HELD THAT - It would therefore not be necessary to examine the other contentions raised by the learned counsel for the appellant including the contention that the extended period of limitation could not have been invoked in the facts and circumstances of the case. The impugned order dated 31.01.2019 passed by the Commissioner therefore deserves to be set aside and is set aside - appeal allowed.

Summary

Issues Involved:
1. Taxability of income from bowling alley.
2. Applicability of the Negative List u/s 66D(j) of the Finance Act.
3. Invocation of the extended period of limitation.
4. Imposition of penalties u/s 76, 77(2), and 78 of the Finance Act.
5. Denial of cum-tax benefit.

Summary:

1. Taxability of Income from Bowling Alley:
The appellant, engaged in operating 'Blu-O Centres', contended that the income from the bowling alley was covered under the Negative List u/s 66D(j) of the Finance Act, 1994. The Commissioner confirmed the demand for service tax on the income from the bowling alley for the period from 2012-2013 to 2015-2016, holding that the facility did not qualify as an 'amusement facility' since it provided other services such as video games and restaurant services in the same premises.

2. Applicability of the Negative List u/s 66D(j) of the Finance Act:
The appellant argued that the definition of 'amusement facility' does not disqualify a facility from being covered under its scope only because other services are provided. The Tribunal held that 'amusement facility' includes a facility where fun or recreation is provided by means of bowling alleys. A place within such a facility where other services are provided would not be covered, but the bowling alley itself would be. The Tribunal concluded that the income from the bowling alley is covered under the Negative List and is not subject to service tax.

3. Invocation of the Extended Period of Limitation:
The Commissioner invoked the extended period of limitation, alleging that the appellant had intentionally and willfully suppressed facts to evade payment of service tax. The Tribunal did not find it necessary to examine this contention in detail since the demand itself was not sustainable.

4. Imposition of Penalties u/s 76, 77(2), and 78 of the Finance Act:
The Commissioner imposed penalties on the appellant for non-payment of service tax. However, since the Tribunal found that the income from the bowling alley was not taxable, the penalties were also set aside.

5. Denial of Cum-Tax Benefit:
The Commissioner denied the cum-tax benefit to the appellant. The Tribunal, however, did not address this issue separately as the primary demand for service tax was found to be unsustainable.

Conclusion:
The Tribunal set aside the impugned order dated 31.01.2019 passed by the Commissioner and allowed the appeal, concluding that the income received from the bowling alley was covered under section 66D(j) of the Finance Act and, therefore, not leviable to service tax.