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2018 (12) TMI 1112 - AT - Service TaxRefund of service tax paid wrongly under the category of renting of immovable property - assesse claimed that the leasing of club (a business) does not fall in the meaning of word immovable property - the appellant has been running the club by way of Joint Venture with AMPL, on principle to principle basis - revenue sharing - Revenue contended that, the club is a multiple use building and the service provided by the club were available only to members and their guests. Held that - In this agreement from the Revenue Sharing Formula and the mutual covenants as agreed between the parties, it is crystal clear that the appellant and AMPL intended to do the business of running of club on principle to principle basis. We further hold that the subsequent modification of the Revenue Sharing Clause between the parties does not change the colour and reduce the arrangement between he parties as that of landlord and tenant. In principle, the appellant has not delivered the possession of club to AMPL by way of tenancy but has only given the right to manage and operate the club for their mutual benefit, on principle to principle basis. Refund claim - time limitation - Held that - there is no application of Section 11 B of the Central Excise Act in grant of refund, in the facts of the present case following the precedent ruling in the case of Union of India Vs. ITC Ltd. 1993 (7) TMI 75 - SUPREME COURT OF INDIA . A tax wrongly realized or paid on in excess of what is permissible in law, is a realization made outside the provisions of the Act. Such amount cannot be retained by Revenue, being in conflict with Article 265 of the Constitution. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the lease of the club building falls under the definition of "Renting of Immovable Property" for service tax purposes. 2. Whether the refund claim by the appellant is barred by limitation. Issue-Wise Detailed Analysis: 1. Definition of "Renting of Immovable Property": The appellant, Ambience Hospitality Pvt. Ltd. (AHPL), entered into an "Agreement of Joint Venture" with Ambience Hospitality Management (P) Ltd. (AMPL) to run a club on a revenue-sharing basis. The agreement detailed the responsibilities of both parties, including the provision of land, construction, and furnishing of the club by AHPL, and the operation and management of the club by AMPL. A Supplemental Agreement dated 17.03.2007 modified the revenue-sharing terms, introducing a fixed monthly lease rental. The appellant paid service tax on the leasing activity, considering it as "Renting of Immovable Property Services." However, they later filed for a refund, arguing that the lease of the club (a business) does not fall under the definition of "immovable property" as per Section 65 (105)(zzzz) of the Finance Act, 1994. They contended that the club, with its various facilities, is akin to a hotel and should be excluded from the definition of "immovable property." The Adjudicating Authority and the Commissioner (Appeals) rejected the refund claim, holding that the club was a multiple-use building and fell under the service tax net. The club provided services only to its members and their guests, unlike a hotel, which offers services to the general public. The Tribunal, however, found that the club provided facilities similar to a hotel, including accommodation and recreational amenities. It was held that the club did not fall under the simple leasing of immovable property but was a case of leasing an entire business. The Tribunal relied on precedents that distinguished between leasing of immovable property and leasing of a business. 2. Limitation on Refund Claim: The appellant argued that the service tax was paid under a mistake of law and cited various decisions supporting their claim that such payments are refundable. They relied on the Supreme Court's decision in Union of India vs ITC Limited, which held that any amount realized in excess of what is permissible in law is outside the provisions of the Act and should be refunded. The Department contended that part of the refund claim was time-barred under Section 11B of the Central Excise Act. However, the Tribunal held that the provisions of Section 11B did not apply in this case, as the tax was wrongly realized, making it a deposit rather than a duty. Conclusion: The Tribunal concluded that the appellant was running the club as a joint venture with AMPL on a principal-to-principal basis. The arrangement was not a simple landlord-tenant relationship but a business collaboration. Therefore, the service tax provisions on renting of immovable property did not apply. The Tribunal also held that the refund claim was not barred by limitation, as the tax was paid under a mistake of law. The appeal was allowed with consequential benefits, and the impugned order was set aside.
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