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TMI Blog2023 (5) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - Service Tax Appeal No. 87687 of 2019 - FINAL ORDER NO. A/85340/2023 - Dated:- 20-1-2023 - HON BLE MR. SANJIV SRIVASTAVA , MEMBER ( TECHN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the room which is kept ready for them to occupy. In such cases, the service tax is paid on such charges by availing abatement of 40% as provided under Notification No.26/2012-ST. dated 20.6.2012. 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. The amount so retained was towards the Declared Service as per clause (e) of Section 66E of the Finance Act, 1994 thus liable for payment of Service Tax on the value of the amount retained. The liability of the service tax on the amount so retained as per the revenue is as detailed below: F. Year Retention Charges ST paid on 60% of the value ST payable on 100% Value Difference 2012-13 51,52,371 3,82,100 6,36,833 2,54,733 2013-14 33,74,891 2,50,282 4,17,137 1,66,855 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree Hotel [2020-TIOL-1114-CESTAT-Del] M P Poorva Kshetra Vidyut Ltd [2021 (2) TMI 821 CESTAT New Delhi) M P Audyogik Kendra Vikas Nigam Indore Ltd. [2022 TIOL 510 CESTAT DEL) South Eastern Coalfields Ltd. [2021 (55) GSTL 549 (TDel) Kingfisher Airlines Ltd. [2015 (40) STR 1159 (T-Mum)] 3.3 Arguing for the revenue learned authorized representative while reiterating the findings recorded in the impugned order submits: The present matter involves declared service mentioned under Clause (e) which can be divided into three part:- agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; The liability of service tax in the above stated circumstances have been fixed by the statutory provision. Therefore, In case of any such circumstances appearing in any transactions between two or more person for consideration, it would be taxable event and would attract service tax at the specified rate. Section 65B (44) defines Service as Service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include...... No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llation fees/room retention charges from the said customers/clients. The appellant discharges service tax on the said cancellation fess/retention charges under 'short term accommodation service' after availing the abatement in terms of Notification No.26/2012-ST dated 20.6.2012. It is the department's contention that the said cancellation fees/room retention charges received by the appellant are not towards the provision of 'short term accommodation service' as no such service is provided when the customer fails to occupy the room reserved by them and as such the appellant are not liable to discharge service tax under 'shortterm accommodation service'. It has been further contended by the department that the amount so retained was towards the Declared Service as per clause(e) of Section 66E of the Finance Act, 1994- agreeing to the obligation to refrain from an act, or tolerate an act or a situation or to an act and thus liable for payment of Service Tax on the gross value of the amount retained without any abatement. 7.1 I find that the appellant charged cancellation fees/retention charges from the no show customers as per the cancellation polic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant rightly fails under the 'Declared Service' and the *room retention charges/cancellation fees' received/charged is liable to service tax on the gross amount received/charged without abatement. The findings of the adjudicating authority to that extent need no interference. Since the demand of Service tax is sustained, the same is recoverable alongwith interest and the findings of the adjudicating authority to that extent also needs no interference. Held Accordingly. 8. As regards invocation of extended period of limitation, imposition of penalty under Section 78 of the Finance Act, 1994, and extending of benefit of cum-tax value, I find that the submissions made in this regard in the appeal memo are similar to what has been stated before the adjudicating authority. I find that the adjudicating authority in paragraph:120, 121 and 122 of his impugned order has given detailed findings on each of the above and arrived at the conclusion that extended period of limitation is invokable in the instant case and consequently, penalty under Section 78 is also imposable and also that the appellant is not entitled to cum-duty benefit. I agree with the findings of the adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vances 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. 4.4 I agree with the submissions made by the appellant that 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 Lemon Tree Hotel [2020 (34) GSTL 220 (T-Del)]. In the said case following was observed: 3. So far as the first issue is concerned, the appellant, in the course of their business of running a hotel, offers advance booking to its customers, on payment of rent or deposit. Sometimes in the event of cancellation or of no show i.e. if the guest does not come for stay, the appellants retains the full or part of the amount towards cancellation charges. It is admitted that the appellant have paid service tax under Accommodation Services as and when they receive advance, availing the permissibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration for the supply of a reservation service. The Tribunal also referred to its earlier decisions in M/s. K.N. Food Industries Pvt. Ltd. v. Commissioner of CGST and Central Excise Kanpur [2019-TIOL- 3651-CESTAT-ALL = 2020 (38) G.S.T.L. 60 (Tri. - All.)] and M/s. Lemon Tree Hotel v. Commissioner, Goods and Service Tax [2020-TIOL-1114-CESTAT-DEL = 2020 (34) G.S.T.L. 220 (Tri. - Del.)]. 27. Ultimately, the Tribunal has held as follows : 43. It is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards consideration for tolerating an act leviable to service tax under section 66E(e) of the Finance Act. 28. The issue that arose for consideration in Lemon Tree Hotel was whether forfeiture of the amount received by a hotel from a customer on cancellation of the booking would be leviable to service tax under Section 66E(e). The Tribunal held that the retention of the amount on cancellation would not attract service tax under Section 66E(e) and the relevant portion of the decisions is reproduced below : 4.6 In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the service provided for transport of passengers by Air . 4.7 CBIC has vide Circular No 178/10/2022-GST dated 3- 08.2022 clarified as follows: 4. In Service Tax law, Service was defined as any activity carried out by a person for another for consideration. As discussed in service tax education guide, the concept activity for a consideration involves an element of contractual relationship wherein the person doing an activity does so at the desire of the person for whom the activity is done in exchange for a consideration. An activity done without such a relationship i.e., without the express or implied contractual reciprocity of a consideration would not be an activity for consideration . The element of contractual relationship, where one supplies goods or services at the desire or another, is an essential element of supply. 6. This goes to show that the service of agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act is nothing but a contractual agreement. A contract to do something or to abstain from doing something cannot be said to have taken place unless there are two parties, one of which expressly or imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n service of allowing cancellation against payment of cancellation charges is also a natural part of this bundle. It is invariably supplied by all suppliers of passenger transportation service as naturally bundled and in conjunction with the principal supply of transportation in the ordinary course of business. 11.3 Therefore, facilitation supply of allowing cancellation of an intended supply against payment of cancellation fee or retention or forfeiture of a part or whole of the consideration or security deposit in such cases should be assessed as the principal supply. For example, cancellation charges of railway tickets for a class would attract GST at the same rate as applicable to the class of travel (i.e., 5% GST on first class or air-conditioned coach ticket and nil for other classes such as second sleeper class). Same is the case for air travel. 11.4 Accordingly, the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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