Service Tax on Telephone Call charges collected by hotels

[Sumeet Tholle]

Sir,

One of the my client is 5 Star Hotel. They are collecting telephone call charegs from their customers but not collecting Service Tax extra and not paying ST on that to Govt.

They are doing this practice since a long time i.e. 8-10 years.

Audit Party asked them to pay Service Tax on Telephone Call charges collected under Business Auxiliary Service and the demand is for 5 years.

Is Servive tax Payable prior to 01/07/2012 ?

Pl. guide.

Thanks.

Sumeet

 

 

 

AI Summary

Hotel Faces Service Tax Demand on Call Charges; Liability Hinges on Markup and Pre-July 2012 Rules. A client, a 5-star hotel, has been collecting telephone call charges from customers without adding or paying service tax for 8-10 years. An audit has demanded payment of service tax on these charges under Business Auxiliary Service for the past five years. The question arises whether service tax was payable before July 1, 2012. The response indicates that if the hotel adds a markup to the telephone charges, it is liable to pay service tax. A recent judgment suggests that reimbursement of expenses is taxable, impacting the calculation of service tax.