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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 ..... FL3 licensed bar and only Liquor was served in the bar. However, the Appellant furnished the details of collections made in their bar to the Department. 1.3 It appeared to the Department that the Appellants were serving snacks and beverages inside the licenced bar and hence services rendered at the bar were covered under "Restaurant Service" w.e.f. 01.05.2011 and hence the Appellant was required to pay Service Tax at the appropriate rates. Hence the Total Taxable value for the period from 01.05.2011 to 30.09.2012 worked out to Rs.24,31,767/- and after extending applicable abatements of 70%, the total Service Tax payable worked out to Rs.2,69,077/-. 1.4 Therefore, a Show cause Notice dated 12.06.2013 was issued to the Appellant seeking to demand the service tax of Rs.2,69,077/- for the period from 01.05.2011 to 30.09.2012 under Section 73 of Finance Act, 1994 (ACT) with applicable interest under Section 75 and to impose penalty under Section 76 of ACT ibid. Subsequently, a statement of demand dated 25.03.2014 was issued for the period from 01.10.2012 to 31.03.2013 demanding Service Tax of Rs.1,18,517/- under Section 73 of the ACT with interest under Section 75 and to impose penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce tax is leviable on the Appellants. viii. It was pointed out that the impugned order ignored the ratio of the decision in the case of Commissioner of Service Tax, Bangalore Vs. LSG Sky Chef Pvt. Ltd. [2012 (27) STR (5) (Kar.)] wherein it was held that the "respondent was eligible to claim deduction in respect of goods portion" while discharging Service tax liability. 3. The Ld. Counsel Shri S. Murugappan appearing for the Appellant submitted that the levy of Service Tax under Section 65(105(zzzv) of the Finance Act, 1994 was only on the specified category of restaurant and not on the permit room or whatever be the facilities attached to that and the same concept continued in the negative services regime as the essence of the statutory provision was in-built in the declared services under Section 66 E read with Sl.no.19 of the mega exemption Notification no.25/2012-ST. It was pointed out that Service Tax levy will not sustain in view of the clarifications issued by the Board Circular dated 10.05.2011. Finally, it was submitted that the present issue was squarely covered by the case of Commissioner of GST and Central Excise, Trichy Vs. Sangu Chakra Hotels Pvt. Ltd., Trichy vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he restaurant. 4.4 Finally, it was submitted that even assuming that restaurant is a separate entity and does not have a licence to serve liquor, the food and beverages served in the bar are liable for charge of Service Tax as they have air-conditioning facility also. Hence it was prayed to dismiss the appeal filed by the Appellant by upholding the impugned order. 5. Heard both sides and carefully considered the rival submissions and evidences on record. 6. The issues that arise for decision in this appeal are:- i. Whether the activity rendered by the Appellant at its licenced bar qualifies for demand of Service Tax under, "Restaurant Service‟ in terms of provisions of Section 65(105)(zzzzv) of the Finance Act, 1994, up till 30.06.2012? ii. Whether the appellant is eligible for exemption under Notification No. 25/2012-ST dated 20.06.2012, which is effective from 01.07.2012? 7.1 It is expedient to examine the legal provisions relevant to this appeal. The appellant was found to be providing "Restaurant Service" w.e.f. from 01.05.2011. The levy of Service Tax on "Restaurant Service‟ came into effect from 01.05.2011 under Section 65(105)(zzzzv) of the Finance Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises does not figure in the negative list under Section 66D. 7.5 Section 65B(44) of the Act defines 'service' as follows :- (44) "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 or immovable property, by way of sale, gift or in any other manner; or (ii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. Thus, as per the above definition, "service" includes a declared service. As per Section 65B(22), "declared service" means any activity carried out by a person for another person for consideration and declared as such under Section 66E." Section 66E specifies nine activities, listed under clauses (a) to (i) of the Section, as constituting declared services. Clause (i) of Section 66E specifies the following activity as constituting a declared service: "Section 66(E)(i): Service portion in an activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances:- 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-ST dated 25.04.2011 From 01.07.2012 to 31.03.2013 'Declared service' covers service portion in an activity wherein food or any other article of human consumption or any drink is supplied as part of the activity.- Section 66E(i). Exemption from tax, granted under Notification No. 25/2012-ST (Sl. No.19), is inapplicable to services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess having (1) 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. Value: 40% of the total amount charged for such supply, in terms of Rule 2C of the Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the services of the restaurants under the coverage of "Restaurant Services‟. 9. Further, we also find that there is no clarity on the value on which Service Tax has been demanded & confirmed in the impugned order. Whether based on the total collections inside the bar or only on the value of food and beverages alleged to be served inside the bar. We find that 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. 10. We further find that the issue is no more res integra in view of this Tribunal's order in a similar case, Commissioner of GST and Central Excise, Trichy Vs. Sangu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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