Custom, Excise & Service Tax Tribunal
Cce,Jaipur-I vs Chokhi-Dhani Resorts Pvt. Ltd on 23 December, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing:28.11.2016
Date of Decision:23/12/2016
ST/Cross/38/2011 along with Appeal No.830/2010-CU(DB)
[Arising out of Order-in-Appeal No.171(DK)ST/JPR-I/2010 dated 30.04.2010 passed by the Commissioner (Appeals), Customs & Central Excise, Jaipur-I]
CCE,Jaipur-I Appellants
Vs.
Chokhi-Dhani Resorts Pvt. Ltd. Respondent
Appearance:
Rep. by Shri Govind Dixit, DR for the appellant.
Rep. by Shri Manish Gaur, Advocate & Shri Rachit Jain, Advocate for the respondent.
Coram: Honble Shri S.K. Mohanty, Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) Final Order No.56060/2016 Per V. Padmanabhan:
The present appeal is filed by Revenue against the order-in-appeal dated 30.04.2010 passed by the Commissioner (Appeals), Jaipur. The respondent is engaged in providing taxable services falling under the category of convention services falling under Section 65(32) of the Finance Act, 1994. It was noticed by the Revenue that during the periods Jan. 2004 to March, 2006 as well as April, 2006 to September, 2007, the appellant had not paid the service tax on the value realized for providing food and room rent from the participants, where the said services were provided as a package. Service tax in this regard to the tune of Rs. 14,75,984/- and Rs.22,97,067/- was demanded vide the order-in-original dated 12.01.2009. When the issue was carried to the Commissioner (Appeals) by the respondent, the demand was set aside. Aggrieved by this order, Revenue is in appeal before the Tribunal.
2. Heard Shri Govind Dixit, ld. DR for the appellant/Revenue and Shri Manish Gaur and Shri Rachit Jain, Advocates for the respondent.
3. The undisputed fact is that while rendering convention services, the respondent has provided food items such as meals and beverages to the participants. The participants were also housed in the rooms made available by the respondent. The respondent raised separate bills for the food items supplied as well as room rent. However, they did not include such items in the value of the taxable services reckoned for payment of service tax under convention services. The Revenues view is that the services for providing rooms as well as supply of food is part of the service rendered by the respondent in connection with the convention services. Accordingly, the service tax demand was raised. The organisors of the conference, no doubt, booked the rooms for the stay of the participants. However, the contention of the respondent is that the room rent is not part of the convention services. In the impugned order, the Commissioner (Appeals) has taken the view that providing of rooms on rent is a distinct, separate and independent activity, which has no relation to the convention service. He has further held that giving the room on rent cannot be considered as a part of convention service. Accordingly, he has held that there is no justification to add the room rent to the value of the convention service for the purpose of levy of service tax. We find no infirmity in the view taken by the ld. Commissioner (Appeals) in this regard.
We also note that the respondent is paying luxury tax on the rent charged from the client and showing the same separately in the bills. This further justifies the view that providing the rooms on rent is an independent activity, which is not part of convention service. We have no hesitation in approving the view taken by the Commissioner (Appeals).
4. Next we turn to the question whether the value of meals and beverages supplied to the participants of the conference is to be included in the value of the conventional services. It is on record that such charges alongwith the room rent have been indicated separately in the bills. It is also on record that the respondent has been paying VAT to the State Government on sale of food and beverages to the customers as indicated in the bills raised by them. It is a settled position of law that two taxes i.e. VAT and Service Tax cannot be levied on the same value. In the impugned order, the Commissioner (Appeals) has recorded the findings that the supply of food and beverages is not an activity ancillary to the primary activity of convention service. We uphold the view of the Commissioner (Appeals) in this regard. The payment of VAT indicates that supply of food is an independent activity, whose value cannot be included in the value for convention service. This view also finds support in the decision of the Tribunal in the case of Daspalla Hotels Ltd. 2010 (18) STR 75 (T-B), wherein it is held by the Tribunal that the cost of food and beverages is excludible from the value for the purpose of charging service tax under convention service in terms of notification no.12/2003-ST. Para-4 of the said decision is reproduced below:-
4.?In the instant case, the appellants have produced evidence to substantiate their claim that they have paid value added tax on the value of food and beverages sought to be taxed under 'convention service, vide the impugned order. In the light of the constitutional provisions relied on by the Tribunal in Sky Gourmet Pvt. Ltd. case (supra) and the ratio thereof to the effect that once the sale tax had already been discharged on food, beverages, etc. the appellants could not be required to pay service tax on the same value, the impugned demand of service tax is not sustainable in law. We find that the appellants have rightly relied on the judgment of the Honble Apex Court in BSNL v. Union of India [2006 (2) S.T.R. 161 (S.C.)] wherein the Court had held as follows :-
82.?For the same reason the Centre cannot include the value of the SIM cards, if they are found ultimately to be goods, in the cost of the service. As was held by us in Gujarat Ambuja Cements Ltd. v. Union of India (2005) 4 SCC 214, 228.
This mutual exclusivity which has been reflected in Article 246(1) means that taxing entries must be construed so as to maintain exclusivity. Although generally speaking, liberal interpretation must be given to taxing entries, this would not bring within its purview a tax on subject matter which a fair reading of the entry does not cover. If in substance, the statute is not referable to a field given to the State, the Court will not by any principle of interpretation allow a statute not covered by it to intrude upon this field. We are fortified in our above finding by the following observations of the Honble Apex Court in the case of Imagic Creative Pvt. Ltd. v. Commissioner of Comml. Taxes [2008 (9) S.T.R. 337 (S.C.)] :-
Payments of service tax as also the VAT are mutually exclusive. Therefore, they should be held to be applicable having regard to the respective parameters of service tax and the sales tax as envisaged in a composite contract as contradistinguished from an indivisible contract. It may consist of different elements providing for attracting different nature of levy. It is, therefore, difficult to hold that in a case of this nature, sales tax would be payable on the value of the entire contract; irrespective of the element of service provided. These observations apply equally to exigibility of goods, supplied in the course of provision of service under a contract to provide service, as service. In the circumstances, we vacate the impugned demand and concomitant penalties. The appeal is allowed. This view further finds support in the decision of the Tribunal in the case of Rambagh Palace Hotels Private Limited Vs. Commissioner 2013 (31) STR 480 (Tribunal-Delhi).
6. In line with the above discussions, we find no merit in the appeal filed by the Revenue. Hence, the Revenues appeal is dismissed.
[ Order pronounced on 23.12.2016.] (S.K. Mohanty) Member (Judicial) ( V. Padmanabhan ) Member (Technical) Ckp.
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