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TMI Blog2023 (12) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... cers of Internal Audit Section, Tiruchirappalli Commissionerate visited the premises of the Respondent and noticed that they were engaged in providing 'Restaurant Service' from 01.05.2011 to 31.12.2012. Right from levy of Service Tax on 'Restaurant Service' w.e.f. 01.05.2011, the Respondent were an airconditioned establishment and had licences to serve alcoholic beverages and also serve food or beverages or both, in their premises. Therefore, the 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. 2.2 Therefore a Show Cause Notice bearing No. 06/2013-ST dated 03.06.2013 was issued to the Respondent proposing to demand 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, besides proposing to levy interest under Section 75 and penalties under Sections 76, 77(1)(a), 77(2) and 78 of the Finance Act, 1994. 2.3 After due process of law, the adjudicating authority vide Order-in-Original No. 06/2014-ST dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing rescinded by Notification No. 34/2012-S.T. dated 20.06.2012 with effect from 01.07.2012. 4.4 After introduction of Negative List based levy of Service Tax with effect from 01.07.2012, Section 66B of the Finance Act, 1994 provides for levy of service on all services other than those services specified in the negative list, provided or agreed to be provided by one person to another. As per Section 65B(34) of the Act, 'negative list' means the services which are listed in Section 66D. Section 66D specifies 17 services, listed under clauses (a) to (q) of the Section, as comprising the negative list. The service provided by a restaurant in relation to serving food or beverage in its premises does not figure in the negative list under Section 66D. 4.5.1 Section 65B(44) of the Act defines 'service' as follows :- "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include - (a) an activity which constitutes merely, - (i) a transfer of title in goods...... (ii) such transfer, delivery or supply of any goods which is...... (iii) a transaction in money or actionable claim; (b) a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year. However, the disputed tax period in this appeal is from 01.05.2011 to 31.12.2012. 4.8 With effect from 01.07.2012, Rule 2C was inserted in the Service Tax (Determination of Value) Rules, 2006. As per this Rule, the value of service portion in an activity wherein food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity at a restaurant, shall be 40% of the total amount charged for such supply. 4.9 From the provisions referred to above, it is seen that Service Tax would be leviable in the following circumstances:- Period Circumstances From 01.05.2011 to 30.06.2012 If a restaurant, by whatever name called, having air-conditioning in any part at any time of the financial year and having licence to serve alcoholic beverages, provides any service in relation to serving food or beverage in its premises.- Section 65(105)(zzzzv) Value: 30% of the gross amount charged, i.e., after allowing abatement of 70% under Notification No. 1/2006- ST dated 01.03.2006 as amended by Notification No. 34/2011-S.T. dated 25.04.2011. From 01.07.2012 to 31.03.2013 Declared service' covers service port ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they serve food / beverages, it appeared that they were not eligible for exemption under Notification No. 25/2012-ST dated 20.06.2012 and hence Service Tax was payable. That the impugned order has drawn support from the clarifications issued in Circular No. 139/8/2011-TRU dated 10.05.2011 which is not applicable to the present case as the restaurant and the permit room were situated in the same hotel whereas the clarification in the circular ibid was with reference to two restaurants situated in a complex. The above view was supported by the clarification at Sl.No. 2 of the Circular wherein it was clarified that the food and beverages served at swimming pool or an open area are also liable for payment of Service Tax as the above areas become extensions of the restaurant. 5.2 It was further submitted that the respondent has satisfied both conditions namely having air-conditioning facility and licence to serve liquor in their premises and hence the service rendered by the Respondent was liable for payment of Service Tax. It was contended that no where it was contemplated in the definition of Section 65(105)(zzzzv) that serving of food or beverages including alcoholic beverages or bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd which are licensed to serve alcoholic beverages. The same concept could have continued in the negative services regime also as the essence of the above statutory provision is in-built in declared services under Section 66E read with Sl. 19 of the Notification No. 25/2012 dated 20.06.2012. 6.2 It was further contended that the attempt to levy Service Tax merely on the ground that there is a permit room in their hotel is against the concept of law. He has referred to the expression 'the establishment' used in the definition of Section 65(105(zzzv)) of the Finance Act, 1994 is intended to qualify the term 'restaurant' and not the hotel establishment as such. The harmonious reading of the complete definition would give the meaning that the restaurant having the air conditioning facility with licence to serve liquor is liable to Service Tax and not the 'restaurant' located in the hotel establishment, which has got a permit room in a separate area distinct from the restaurant. It was further averred that the 'permit rooms' are not liable to Service Tax, even if food and beverages are served there as they are not restaurants attracting Service Tax levy. 7. We have considered the subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular No. 139/8/2011-TRU dated 10.05.2011 / F.No. 334/81/2011-TRU has clarified about the taxability of the services provided by Restaurants which is extracted below for ready reference:- Sl. No. Queries Clarification 1. If there are more than one restaurants belonging to the same entity in a complex, out of which only one or more satisfy both the criteria relating to air- conditioning and licence to serve liquor, will the other restaurant(s) be also liable to pay Service Tax? Service Tax is leviable on the service provide by a restaurant which satisfies two conditions: (i) it should have the facility of air conditioning in any part of the establishment and (ii) it should have license to serve alcoholic beverages. Within the same entity, if there are more than one restaurant, which are clearly demarcated and separately named, the ones which satisfy both the criteria is only liable to service tax. 2. ..... ...... 3. .... ..... From the above clarification, it is clear that Service Tax is liable on the Restaurant Service if two essential conditions are required to be fulfilled viz., if it has the facility of air-conditioning in any part of the establishment an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the officers of Hqrs. Anti-Evasion, Trichy of the premises of the appellant. From the report furnished by the Superintendent of Central Excise, Hqrs. Anti-Evasion, Trichy vide C.No. IV/06/231/2012-HAE dated 07.02.2014, it is seen that:- i. In respect of Hotel Sangam, Trichy, there are two restaurants i.e. one 24 Hour Coffee House and another restaurant and one liquor bar. The liquor bar (Soma Bar) and the two Restaurants (24 Hour Coffee Shop and Chembian Restaurant) are located in the same Hotel premises. The site map of the Hotel Premises clearly shows that the restaurant is clearly demarcated and has no connection what-so-ever with the liquor bar. ii. In respect of Hotel Sangam, Thanjavur, both liquor bar and the Restaurant (Cascade Restaurant) are located in the same Hotel premises. But the liquor bar is not part of the Restaurant situated in the Hotel. The liquor bar and Restaurant are located at different sides/locations of the Hotel premises. The Hotel has the facility of Centralised AC. The site map of the hotel premises also shows that the Restaurant is clearly demarcated from the liquor bar. iii. On perusal of the FL-3 licence issued in respect of both the above s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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