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TMI Blog2024 (6) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... 16.03.2012, the restaurant at the premises of the Appellant do not fulfil the requirement of having a licence to serve alcoholic beverages in the premises of the air-conditioned restaurant, in order to bring the service under the ambit of Restaurant Services. The demand raised in the Show Cause Notice is on the total collections (liquor sales) in the licenced bar and not on the value of the food and beverages served inside the bar and as such the demand suffers from infirmity and the adjudicating authority made a blatant error in confirming the demand. For computation of service tax considering entire liquor sales in a permit room is clearly against the provisions of the law as alcoholic liquor for home consumption is outside the Service Tax Act. Even, in a case where snacks and beverages are sold in permit room, service tax payable should have been limited to computing to such sales of snacks and beverages. The demand of service tax on the Appellant is devoid of merits - Appeal allowed. - MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) For the Appellant : Mr. S. Murugappan, Advocate For the Respondent : Mr. Harendra Singh Pal, Authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved, the Appellant has come on appeal before this forum. 2. The main grounds of appeal filed by the appellant are as specified below:- i. It was submitted that none of the restaurants in their hotel were having license to serve liquor as the permit bar with FL 3 licence is clearly demarcated and is not permitted to sell liquor at any place other than the permit bar as it is a punishable offence under Tamil Nadu (Liquor and Permit) Rules. ii. It was averred that the provisions of Section 65(105)(zzzzv) contemplates assessment of sale of food in a restaurant and not sale of liquor. iii. It was pointed out that the sale of food and liquor already suffered VAT @ 14.5% iv. It was contested that the impugned order ignored the decision in the case of Kerala Classified Hotels and resorts Association and others Vs. Union of India [2013-TIOL-533-HC-Kerala] wherein it was held that sub-clauses (zzzzv) and (zzzzw) to clause 105 of Section 65 of the Act is beyond the legislative Competence of the parliament. v. It was contended that the impugned order ignored the fact that two conditions were to be satisfied for levy of Service tax under the category of restaurant service Viz. (a) It should ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aurant in relation to serving of food or beverages in its premises does not figure in the negative list and as the respondent have licence to serve liquor in the premises and have the facility of air-conditioning in their establishment where 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 liable for payment of Service Tax. It was pointed out that the clarifications issued in Circular No. 139/8/2011-TRU dated 10.05.2011 was relevant to the case as it was clarified in Sl.No. 2 of the Circular 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. 4.2 It was further submitted that the respondent has satisfied both conditions namely having an 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 both should take place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice means any service provided or to be provided to any person, by a restaurant, by whatever name called, having the facility of air-conditioning in any part of the establishment, at any time during the financial year, which has licence to serve alcoholic beverages, in relation to serving of food or beverage, including alcoholic beverages or both, in its premises. 7.3 It is thus seen that 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, then such service would be liable to Service Tax under Section 65(105)(zzzzv) of the Finance Act 1994, as it stood prior to 01.07.2012. Notification No. 1/2006- ST dated 01.03.2006 as amended by Notification No. 34/2011-ST dated 25.04.2011 grants abatement in value to the extent of 70% of the gross amount charged for providing the restaurant service. In other words, Service Tax would be payable on 30% of the gross amount charged for providing the restaurant service. This Notification No. 1/2006- S.T. remained in force upto 30.06.2012 before being rescinded by N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is effective from 01.07.2012, exemption from Service Tax is granted to the taxable services specified in the notification. The entry at Sl.No. 19 of the Notification specifies, services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having (i) the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year, and (ii) a licence to serve alcoholic beverages. It is thus seen that the exemption under the above Notification is not applicable to services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess having air- conditioning or central air-heating in any part at any time of the year and having a licence to serve alcoholic beverages. The condition regarding 'licence to serve alcoholic beverages' has been omitted by the amendment made to the above Notification by Notification No. 3/2013-S.T. dated 01.03.2013 with effect from 01.04.2013. Consequently, with effect from 01.04.2013, Service Tax would be attracted even if only one condition is satisfied, i.e., if there is air-conditioning or central air-heating facility in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax is liable to be paid on the Restaurant Service if two essential conditions are fulfilled viz., if it has the facility of air-conditioning in any part of the establishment and it should have licence to serve alcoholic beverages. Therefore, we are of the view that for the period from 01.05.2011 to 16.03.2012, the restaurant at the premises of the Appellant do not fulfil the requirement of having a licence to serve alcoholic beverages in the premises of the air-conditioned restaurant, in order to bring the service under the ambit of Restaurant Services. 8.2 In terms of the Notification No. 12/2012-ST dated 17.03.2012 the Union of India exempted various taxable services from the whole of the service tax leviable under Section 66B of the Finance Act, 1994. In respect of Restaurant Service, the above Notification has provided exemption, subject to certain condition which read as follows:- 19. Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air-conditioning or central air heating in any part of the establishment, at any time during the year and which has a licence to serve alcoholic beverages ..... X X X X Extracts X X X X X X X X Extracts X X X X
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