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TMI Blog2023 (12) TMI 1006X X X X Extracts X X X X X X X X Extracts X X X X ..... t turn out or cancelled the reservations already made by them. The said activity of the appellants is alleged to be a declared service as the act amounts to agreeing to tolerate an act or a situation. Receiving no proper response from the appellants that a Show Cause Notice No.829 dated 18.04.2016 was served upon the appellants proposing the recovery of service tax amounting to Rs.17,103/- on the service charges of Rs.7,18,331/- collected by them i.e. in the former case and a demand of Rs. 1,35,709/- on the amount of Rs.10,97,974/- collected in the name of no show charges by them i.e. in the latter case. The proportionate interest and the appropriate penalties were also proposed vide the said Show Cause Notice. The proposal was initially confirmed vide the Order-in-Original No.87/2017 dated 31.03.2017. The appeal against the said order has been rejected vide the order under challenge. Being aggrieved the appellant is before this Tribunal. 2. We have heard Mr. M. Mahipal, Chartered Accountant and Shri S.K. Meena, Authorised Representative for the Revenue. 3. Ld. Counsel for the appellant has submitted with respect to the alleged demand about service charges collected from the cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artmental Representative has mentioned that the appellants were charging the amount from their customers with all intention to not to pay service tax on the impugned restaurant services. It was an intentional act of the appellants to not to pay the service. Hence there is sufficient suppression of facts and malafide intent on part of the appellants. The extended period has rightly been invoked. Appellants were otherwise not including details of impugned services in the returns. Nor they were paying service tax in respect of the declared services vis-à-vis „no show charges‟. Impressing upon the findings in the order under challenge the appeal in hand is prayed to be dismissed. 7. Ld. Departmental Representative has relied upon the decision of this Tribunal in the case of Hotel Mela Plaza vs. Commissioner of Central Excise, Ghaziabad reported as 2006 (3) STR 563 (Tri.-Del.). 8. Having hearing the rival contentions and perusing the record, we are of the opinion that following issues need to be adjudicated: (1) Whether the service charges collected besides the price of the food while rendering the restaurant service, the appellant was liable to pay tax on the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these provisions makes it clear that where service charge is chargeable on any taxable service with reference to its value there has to be a consideration either in the form of money or wholly or partly consisting of money or where it is not ascertainable in money. Term consideration is defined under section 2 (d) of Indian Contract Act, 1872 which reads as follows:- "2(d) When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise." 11. Hon'ble Apex Court in the case of Commissioner of Service Tax vs. M/s. Bhayana Builders reported as 2018 (2) TMI 1325 has held that consideration must flow from the service recipient to the service provider and should accrue to be benefit of the service provider and that the amount charged has necessarily to be a consideration for the taxable service provided under the Finance Act. The Hon'ble Supreme Court clarified that any amount charged which has no nexus with the taxable service and is not a consideration for the service provider it sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther when one person agrees to the obligation to refrain from an act, or to tolerate an act, or a situation, or to do an act. In other words, the agreement should not only specify the activity to be carried out by a person for another person but should specify the : (i) consideration for agreeing to the obligation to refrain from an act; or (ii) consideration for agreeing to tolerate an act or a situation; or (iii) consideration to do an act. Thus, a service conceived in an agreement where one person, for a consideration, agrees to an obligation to refrain from an act, would be a „declared service‟ under section 66E(e) read with section 65B(44) and would be taxable under section 68 at the rate specified in section 66B. Likewise, there can be services conceived in agreements in relation to the other two activities referred to in section 66E(e). 14. It is trite that an agreement has to be read as a whole so as to gather the intention of the parties. The intention of the appellant and the parties was for supply of hotel accommodation and for availing various types of associated services. The consideration contemplated was for such supply of said service. The intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 retain 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 permissible abated value. It is the case of the Revenue that upon cancellation by the customers, the gross amount received by the appellant qualifies the receipt under Section 66E(e). Ld. Commissioner (Appeals) in confirming the demand under this head has observed that retention of such cancellation charges is not against the provisions of intended services but for not availing the said services by the customers, which the appellant has tolerated. Having considered the rival contentions, I find that the aforementioned observation of the Commissioner (Appeals) are erroneous and have no legs to stand. Admittedly, the customers pay an amount to the appellant in order to avail the hotel accommodation services, an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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