TaxTMI 
TaxTMI 
2019 (9) TMI 667
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.... terms of notification no.26/2012. * Whether the appellants are liable for payment of service tax on letting out plant/machinery and fixtures to M/s. Mahindra Holidays & Resorts India Ltd. (MHRIL for short) under Supply of Tangible Goods. (SOTGS for short) * Whether extended period of limitation is invokable. * Whether penalty under Section 77 and 78 is imposable. 2. The cross Appeal by revenue is for enhancement of penalty imposed under Section 78 of Finance Act. 3. The brief facts are that the team of Central Preventive Officers visited the appellants office at Nainital on 19.09.2013. During the course of investigation, a statement of Mr. Anuj Sexena, Manager (Corporate & Finance) has been recorded on 01.04.2014, wherein he stated that:- (a) Appellants are registered under service tax since 07.02.2008 in the category of management consultancy, renting of immovable property, club/association membership, tour operator, health club and fitness centre etc. (b) The account of the unit have been audited by Central Excise Department till September, 2011. (c) Appellants have rented their premises at Corbett, Naukuchiyatal to M/s. Club Mahendra Holidays & Resorts India Lt....
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....purpose of holidays homes/resorts and the premises have facility of swimming pool/bar/restaurant/conference hall/fitness centre etc. Premises are not leased out exclusively for the purpose of accommodation, but also for furtherance of business and commerce. Explanation-2 of section 65 (105) (zzzz) categorically states that an immovable property party for use in the course or furtherance of business and commerce and partly for residential or any other purposes shall be deemed to be immovable property for use in the course or furtherance of business or commerce. Thus services rendered by appellant appear to be covered under the renting of immovable property. (e) Appellants contention that leasing of machinery equipment and appliances for use by M/s Mahendra Holidays & Resorts India Ltd is not covered under the definition of supply of tangible goods services, does not appear to be correct. (f) From perusal of terms and condition of the lease deed, it appears that right to use is not transferred as appellants retain the permissions and license relating to resort, including plant/machinery and other appliances. (g) Even though the custody have been transferred along with permis....
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....n to renting of immovable property for use in the course of or for furtherance of business or commerce" but it does not include - (d) building used solely for residential purposes and building used for purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities. Explanation II provides that for the purpose of this sub-clause, "an immovable property partly for use in the course or furtherance of business or commerce and partly for residential or any other purposes shall be deemed to be immovable property for use in the course or furtherance of business or commerce" 7. The aforementioned definition was amended retrospectively by Finance Act, 2010. However, the exclusion for hotels in Clause (d) in Explanation (1) continued. 8. Ld. Counsel further states that the Commissioner has erred in holding that the appellant's hotel provides other facilities like swimming pool, bar and restaurant, conference halls, etc. Thus, the building is not solely used for the purpose of accommodation as these are commercial in nature. Ld. Counsel submits that the facilities of swimming pool, bar and restaurants, conference, etc. available a....
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....nected with the output service of leasing of hotels. 11. So far as the next issue is concerned regarding the service tax under the category of "supply of tangible goods service", being separate charges received from the lessee-Mahindra Holiday and Resorts for use of plant and machinery and fixtures. It is urged that these are installed in the hotel premises, which has been let out lease out. The complete control and possession of these goods have been given to the Mahendra Holidays. Such granting of right to use with delivery of the goods amounts to deemed sale, which is liable to VAT. Thus, excluded from the levy of service tax. Service tax under SOTG is applicable when the goods are provided for use without transfer of right to possession and effective control. Ld. Commissioner has erred in holding that even though the custody /possession has been transferred along with right to use, Mahendra Holiday is not free to use the goods including the equipments, in any manner, as they are liable, and conditions have been imposed on their use and control. Further, the appellant has admittedly not paid any VAT. Ld. Counsel states that non-payment of VAT is not a pre-condition for applicab....
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.... Revenue are not applicable to the present case. Rather the facts are akin to the ruling in the case of Jai Mahal Hotels Pvt. Ltd.(supra), wherein vide Final Order No.ST/A/52121-52122/2014-CU(DB) dated 8.5.2014, wherein it has been held that on true and fair construction of the provisions of Exclusionary Clause under Explanation I to Section 65(105) (zzzz) and in particular, sub-clause (d) thereof, it was held that renting of building used for the purpose of accommodation including hotels, meaning thereby renting of a building for a hotel is covered by the Exclusionary Clause and does not amount to an immovable property, falling within the ambit of taxable service. Accordingly, it is held that for the part of the disputed period August, 2008 to 30.06.2012, the appellant is not liable to service tax. For the period from 1.7.2012, the appellants have admittedly deposited the service tax and has not disputed their liability, subject to abatement. Under the facts and circumstances, we hold that the appellant, as provided in Notification No.26/2012-ST, is entitled to abatement of 40% and is liable for service tax only on the balance receipt of 60% with respect to the lease rent of the h....