Custom, Excise & Service Tax Tribunal
M/S. Orient Express Co. Ltd vs C.C.E.&S.T., Bhopal on 20 October, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST BLOCK NO.2, R.K. PURAM, NEW DELHI 110 066. Date of Hearing/Order : 20.10.2016 Appeal No.ST/3962/2012-CU[DB] [Arising out of Order-in-Appeal No.175/BPL/2012, dated 10.09.2012 passed by C.C.E.(Appeals), Bhopal] M/s. Orient Express Co. Ltd. Appellant Vs. C.C.E.&S.T., Bhopal Respondent
Appearance Ms. Aparna H, Advocate - For Appellant Mr. Sanjay Jain, DR - For Respondent CORAM: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Mr. Ashok K Arya, Member (Technical) Final Order No.54918/2016, dated 20.10.2016 Per Mr. Ashok K Arya :
Appellant is in appeal against the Order-in-Appeal No.175/BPL/2012, dated 10.09.2012 passed by Commissioner (Appeals), Bhopal. The matter concerns with the liability of service tax under the category of Renting of Immovable Property service, when entire space named as Hotel Chandela was given to M/s. Indian Hotels Company Ltd. (IHCL) for running, conducting and operating.
2. The appellant has been represented by Ms. Aparna, ld. advocate and the Revenue has been represented by Mr. Sanjay Jain, ld. Departmental Representative.
3. Ld. advocate for the appellant inter alia submits as under:-
(i) There is specific exclusion for building used for accommodation including hotels under Explanation 1 to Section 65 (105) (zzzz) of the Finance Act, 1994. Therefore, the same is not taxable under renting of immovable property service.
(ii) In support of her contention, she relies upon the following decisions:-
a) Jai Mahal Hotels Pvt. Ltd. Vs. CCE, Jaipur [2014 (36) STR 669 (Tri.-Del.)]
b) Paradise Mehak Properties Pvt. Ltd. Vs. CCEST, Jaipur-I [2014-TIOL-2156-CESTAT-DEL]
c) Ambience Constructions India Ltd. Vs. CST, Hyderabad [2013 (31) STR 343 (Tri.-Bang.)]
d) Lake Palace Hotel and Motels Pvt. Ltd. Vs. CCE, Jaipur-II [2016-TIOL-2140-CESTAT-DEL].
4. Ld. Departmental Representative reiterates the findings given by the lower authorities.
5. We have considered the facts of the case, submissions of both the sides and case laws cited. The reference is made to the Explanation 1 to Section 65 (105) (zzzz) of the Finance Act, 1994, which is reproduced below:-
Explanation 1.For the purposes of this sub-clause, immovable property includes
(i) building and part of a building, and the land appurtenant thereto;
(ii) land incidental to the use of such building or part of a building;
(iii) the common or shared areas and facilities relating thereto; and
(iv) in case of a building located in a complex or an industrial estate, all common areas and facilities relating thereto, within such complex or estate, but does not include
(a) Vacant land solely used for agriculture, aquaculture, farming, forestry, animal husbandry, mining purposes;
(b) Vacant land, whether or not having facilities clearly incidental to the use of such vacant land;
(c) Land used for educational, sports, circus, entertainment and parking purposes; and
(d) Building used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities.
[(v) ... (Emphasis applied) 5.1 Explanation 1 to Section 65(105) (zzzz) of the Act makes it very clear that buildings used for residential purposes and accommodation including hotels cannot be covered under the wordings immovable property. In the present case, there is no dispute on the fact that the entire property/space named as Hotel Chandela is used as hotel only; when it is so, Revenues stand that the service tax is liable for the renting of subject property is not correct and is untenable in the eyes of law. In this regard, the observations made by the Tribunal in the case of Jai Mahal Hotels Pvt. Ltd. Vs. CCE, Jaipur (supra) in paras 9 10 of the said decision are reproduced below:-
9.?In our considered view the above interpretation adopted by the Authorities below is fundamentally flawed. The taxable service falling within the scope of Section 65(90a) and enumerated to be a taxable service under Section 65(105)(zzzz) is the renting of immovable property. A reading of clause (90a) and clause (zzzz) would indicate that a complex drafting methodology is adopted. Even in clause (90a) there are inclusionary and exclusionary clauses. Under this provision renting of immovable property or similar arrangement for use in course of or furtherance of business or commerce but excluding renting of immovable property by a religious body or to a religions body; renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre, are excluded. The Explanation under clause (90a) further defines the expression for use in the course or business or commerce and also incorporate a clarificatory clause for removal of doubts, not necessary for the purposes of these appeals. Similarly, in clause (zzzz) there are inclusionary or exclusionary clauses embedded.
10.?On a true and fair construction of provisions of the exclusionary clause under Explanation 1 to Section 65(105)(zzzz); and in particular sub-clause (d) thereof, we are compelled to the conclusion that renting of buildings used for the purpose of accommodation including hotels, meaning thereby renting of a building for a hotel, is covered by the exclusionary clause and does not amount to an immovable property, falling within the ambit of the taxable service in issue.
5.2 Further, CESTAT in the case of Paradise Mehak Properties Pvt. Ltd. Vs. CCEST, Jaipur-I (supra) has observed as under:-
3. Revenue by entertaining a view that the appellant are under obligation to pay service tax under the categor5y of renting of immovable property initiated proceedings against them, which resulted in passing of the present impugned orders. At this stage, we find that the issu is no more res integra and the Tribunal in the case of 2014-TIOL-992-CESTAT-DEL has held that leasing/renting of immovable property for a hotel is expressly excluded from the ambit of the taxable service under Section 65 (105) (zzzz).
6. Based on the discussions and observations of CESTAT given above, there is no liability of service tax in respect of property of Hotel Chandela leased out for running, operating, etc. to IHCL.
7. The appeal is allowed with the consequential relief to the appellant.
(Archana Wadhwa) Member (Judicial) (Ashok K Arya) Member (Technical) SSK -6-