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TMI Blog2025 (3) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... ice tax. However any amount paid for not joining a competing business would be liable to be taxed being paid for providing the service of forbearance to act.'
Tribunal in Shiv Vilas Resort [2023 (12) TMI 1006 - CESTAT NEW DELHI] it was held that 'the adjudicating authority below has wrongly held the „no show charges‟ as a consideration for providing declared service.'
There are no reason to differ from these findings. Since the issue stands already decided in favour of assessee and has attained finality, it is no more res-integra. The adjudicating authorities are held to have failed to follow the judicial protocol while going against the said decisions.
Conclusion - i) The "notice pay" collected from employees for not serving the agreed notice period is not a consideration for any service and therefore not subject to service tax. ii) The amounts retained by the appellant due to cancellation of bookings do not constitute a declared service under Section 66E(e) of the Finance Act, 1994, and are not taxable.
Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to be recovered from appellant in Appeal No. 51668 of 2019 vide Show Cause No.03/2016 - 17 dated 28.06.2016. 4. In Appeal No. 52265/2019 the audit for the period as mentioned above was conducted by internal audit team of Central Excise Audit Commissionerate, Jaipur it was found that the appellant has retained the cancellation charges, while providing the services under the category of short term accommodation for which they were booking the rooms and were charging consideration as advances from their customers in cases were customer could not avail those services and cancel the booking, the said advance amount was retained by the appellant. The amount retained was alleged to be a consideration for rendering the declared service i.e. the act of agreeing to the obligation to refrain from an act, all to tolerate an act or a situation, or to do an act is a declared service as defined under section 66E (e) of Finance Act, 1994. The whole amount so retained of Rs.22,68,542/- was alleged liable to service tax. The appellant had discharged the tax liability on 60% of the said amount only. Resultantly, the differential service tax amounting to Rs.1,12,157/- + Rs.1,70,372/- = Rs.2,82,52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x & Excise, Thrissur - 2023 (69) GSTL 141 (Ker.) 3. GE T & D India Ltd. V. Deputy Commissioner of Central Excise, Chennai - 2019 (12) TMI 1566-Madras High Court. 4. KJS Cement Ltd. V. Commissioner of CGST, Central Excise & Customs, Jabalpur (MP) - 2023 (12) TMI 903-CESTAT New Delhi 5. Balaji Medical & Diagnostic Research Centre V. Principal Commissioner, CGST (East Delhi), New Delhi - 2023 (12) TMI 748- CESTAT New Delhi 6. Rajasthan Rajya Vidhyut Prasaran Nigam Limited V. Commissioner, CGST, Customs & Central Excise, Jodhpur- 1 - 2022 (1) TMI 909- CESTAT New Delhi 9. Ld. Counsel has relied upon the case laws in the cases of Shiv Vilas Resorts (P) Ltd. V. The Commissioner of Central GST and Central Excise, Jaipur - 2023 (12) TMI 1006 - CESTAT New Delhi, Lemon Tree Hotel V. Commissioner, CGST, CE & CU 2019 (7) TMI 767- CESTAT New Delhi & Jubilant Motor Works (South) Pvt. Ltd. V. the Commissioner of GST & CE, Chennai - 2024 (2) TMI 819-CESTAT Chennai to submit that the issue about amount collected as "retention / cancellation charges" by way of forfeiter of advance amounts from the customers on account of cancellation of booking is also not towards the provision of any servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case deals with contracts of employment. Employment contracts are entered into with the expectation that the employer will continue to keep him employed for the period as agreed and that the employee will perform his duties diligently. They are not entered into so that the employer can remove the employer from service or so that the employee can resign and leave the service. However, often, for various reasons the employer may decide to terminate the services of the employee which puts the employee to inconvenience and he has to find another job. Conversely, the employee may decide to resign and leave the service which inconveniences the employer who will have to make alternative arrangements such as finding a substitute. A notice period on both sides is provided for so that the other party can make arrangements. If the employer decides to terminate the services without giving the required notice, the employment contract itself provides for a compensation to be paid. Similarly, if the employee resigns without notice, compensation is paid by the employee or recovered from his dues. Both the notice period and the compensation are incorporated in the employment contact itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 intention of the parties certainly was not for flouting the terms of the agreement. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, and not for agreei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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