Restaurant loses service tax exemption appeal after claiming air conditioning was removed due to power issues

CESTAT dismissed the appeal in a service tax case where the appellant claimed exemption by arguing the restaurant lacked air conditioning. The appellant stated AC was removed due to insufficient power capacity, but documentary evidence showed the initial liquor license application declared the restaurant as air-conditioned. The State Excise Department confirmed no communication was received regarding AC removal. The tribunal found the appellant's statement was merely to avoid service tax liability without substantive proof. The burden to prove exemption eligibility remained unmet, and the appeal was dismissed following similar precedent involving the same proprietor.

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The present appeal before the Appellate Tribunal concerns M/s Gurukripa Shahenshah Veg and Non-Veg Restaurant challenging the Commissioner (Appeals) decision confirming a service tax demand, interest, and penalties imposed under the Finance Act, 1944. The appellant, a sole proprietorship firm engaged in Restaurant-cum-Bar services, faced allegations that its restaurant service was subject to service tax due to the presence of air conditioning facilities. The appellant argued that the air conditioning was removed, and it lacked the power capacity to run AC. The appellant contended that there was no intention to evade tax and invoked legal precedents to support its position.The Department, represented by the Authorized Representative, maintained that the presence of AC was a mandatory requirement for obtaining and renewing the Bar License. The Department highlighted the appellant's declaration of having AC facilities and the failure to obtain Service Tax Registration during the relevant period. The Department argued for the dismissal of the appeal.The Tribunal considered the arguments and evidence presented. The Tribunal noted the definition of Restaurant-cum-Bar Service under the Finance Act, 1994, and the subsequent amendments. It reviewed the appellant's statements, the State Excise Department's verification, and the documentary evidence regarding the presence of AC facilities. The Tribunal referenced a previous case involving the same proprietor, where similar issues were addressed, and upheld the findings against the appellant. The Tribunal concluded that the extended period of limitation applied due to the appellant's actions to evade tax liability. Penalties under the Finance Act, 1994 were confirmed, and the appeal was dismissed.In summary, the Tribunal upheld the Department's decision based on the mandatory requirement of AC facilities for the Bar License, the appellant's inconsistent statements, and the failure to provide substantive evidence to support its claims. The Tribunal found the appellant's conduct demonstrated an intent to evade tax, leading to the confirmation of the service tax demand and penalties. The decision was in line with previous rulings and legal principles, resulting in the dismissal of the appeal.

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