Appellant not liable for service tax on profit-sharing with GRT as it's not 'Renting of Immovable Property Services'

The appellant was not held liable to pay service tax under 'Renting of Immovable Property Services' for amounts received from GRT. The Tribunal determined that the profit-sharing agreement between the appellant and GRT did not constitute a rental agreement but rather a sharing of business income, following precedents indicating such agreements fall outside the taxable service category. The Tribunal set aside the service tax demands, allowing the appeal with consequential reliefs in accordance with the law.

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Issues Involved:
1. Liability of the appellant to pay service tax under 'Renting of Immovable Property Services'.
2. Definition and interpretation of 'Renting of Immovable Property Services'.
3. Nature of the agreement between the appellant and GRT.
4. Consideration received under the agreement.
5. Relevant judicial precedents and their applicability.

Summary:

1. Liability of the appellant to pay service tax under 'Renting of Immovable Property Services':
The primary issue is whether the appellant is liable to pay service tax under the category of 'Renting of Immovable Property Services' for the amounts received from GRT.

2. Definition and interpretation of 'Renting of Immovable Property Services':
The definition of 'Renting of Immovable Property Services' as per Section 65(105)(zzzz) of the Finance Act, 1994, includes renting, letting, leasing, licensing, or other similar arrangements of immovable property for use in the course of business or commerce. However, buildings used for the purposes of accommodation, including hotels, are excluded from this definition.

3. Nature of the agreement between the appellant and GRT:
The appellant entered into an agreement with GRT to operate and run the hotel. The agreement specified that GRT would pay a sum calculated as a percentage of the gross room income and food & beverage income derived from the hotel. The appellant contended that this arrangement is a profit-sharing agreement and not a rental agreement.

4. Consideration received under the agreement:
The consideration received by the appellant is not a fixed rent but a share of the profits from the hotel business. This profit-sharing arrangement indicates that the agreement is not for renting immovable property but for sharing the business income.

5. Relevant judicial precedents and their applicability:
The Tribunal relied on the judgments in the cases of Jai Mahal Hotels Pvt. Limited and Grand Royale Enterprises Ltd., which held that similar profit-sharing agreements do not fall under the category of 'Renting of Immovable Property Services'. The decision in Grand Royale Enterprises Ltd. was affirmed by the Supreme Court, reinforcing that such agreements are outside the purview of the taxable service.

Conclusion:
After analyzing the facts, evidence, and applying the decision in Grand Royale Enterprises Ltd., the Tribunal concluded that the demands for service tax cannot sustain. The impugned order was set aside, and the appeal was allowed with consequential reliefs as per law.

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