Bowling alley income exempt from service tax under section 66D(j) Negative List despite multiple facility services

CESTAT New Delhi held that bowling alley income falls under the Negative List under section 66D(j) of the Finance Act and is not subject to service tax. The tribunal ruled that while the appellant's center provided multiple services including bowling, video games, restaurant facilities, and retail sales, the bowling alley area was clearly demarcated with separate charges. The definition of amusement facility covers recreational activities like bowling alleys, and the provision of other services elsewhere in the facility does not disqualify the bowling area from exemption. The Commissioner's order was set aside and appeal allowed.

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Issues Involved:
1. Taxability of income from bowling alley.
2. Applicability of the Negative List u/s 66D(j) of the Finance Act.
3. Invocation of the extended period of limitation.
4. Imposition of penalties u/s 76, 77(2), and 78 of the Finance Act.
5. Denial of cum-tax benefit.

Summary:

1. Taxability of Income from Bowling Alley:
The appellant, engaged in operating 'Blu-O Centres', contended that the income from the bowling alley was covered under the Negative List u/s 66D(j) of the Finance Act, 1994. The Commissioner confirmed the demand for service tax on the income from the bowling alley for the period from 2012-2013 to 2015-2016, holding that the facility did not qualify as an 'amusement facility' since it provided other services such as video games and restaurant services in the same premises.

2. Applicability of the Negative List u/s 66D(j) of the Finance Act:
The appellant argued that the definition of 'amusement facility' does not disqualify a facility from being covered under its scope only because other services are provided. The Tribunal held that 'amusement facility' includes a facility where fun or recreation is provided by means of bowling alleys. A place within such a facility where other services are provided would not be covered, but the bowling alley itself would be. The Tribunal concluded that the income from the bowling alley is covered under the Negative List and is not subject to service tax.

3. Invocation of the Extended Period of Limitation:
The Commissioner invoked the extended period of limitation, alleging that the appellant had intentionally and willfully suppressed facts to evade payment of service tax. The Tribunal did not find it necessary to examine this contention in detail since the demand itself was not sustainable.

4. Imposition of Penalties u/s 76, 77(2), and 78 of the Finance Act:
The Commissioner imposed penalties on the appellant for non-payment of service tax. However, since the Tribunal found that the income from the bowling alley was not taxable, the penalties were also set aside.

5. Denial of Cum-Tax Benefit:
The Commissioner denied the cum-tax benefit to the appellant. The Tribunal, however, did not address this issue separately as the primary demand for service tax was found to be unsustainable.

Conclusion:
The Tribunal set aside the impugned order dated 31.01.2019 passed by the Commissioner and allowed the appeal, concluding that the income received from the bowling alley was covered under section 66D(j) of the Finance Act and, therefore, not leviable to service tax.

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