TaxTMI 
TaxTMI 
2023 (5) TMI 808
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....nder Section 75 of the Finance Act, 1994 on the amount confirmed at (i) above; (iii) I do not impose any penalty under Section 77 of Finance Act, 1994; (iv) I impose penalty of Rs. 13,48,706/- (Rupees Thirteen Lakhs Forty-eight Thousand Seven Hundred and Six only) on the assessee, i.e. EIH Ltd. Unit Trident BKC, under the provisions of Section 78(1) of Finance Act, 1994; (v) In terms of Clause (ii) of the Second proviso to Section 78(1) of the Finance Act, 1994, the assessee will have the benefit of reduced Penalty of 25% as imposed at (iv) above, if the entire Service Tax and interest as confirmed above as well as such reduced penalty is also paid within 30 days of the receipt of this order. 2.1 Appellant holding Registration No.AABCB0266D001, is engaged in the business of providing Accommodation and Restaurant Service. 2.2 During the course of audit of the records of the appellant for the period April 2011 to March 2015, it was observed that the appellant had recorded income under the Head 'Room Charge Retention' on cancellation of accommodation by their customers during the years 2012-13 to 2015-16. As per the appellant, this income is ge....
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....ginal referred in para 1 above. The appeal filed by the appellant against the order in original has been dismissed as per the impugned order. 2.5 Aggrieved appellant have filed this appeal. 3.1 I have heard Shri Jay Chheda, Advocate for the Appellant and Shri Prabhakar Sharma, Superintendent, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsel submits that the issue Issue involved in the present case is with regards to denial of the benefit of exemption claimed by them as per notification No 26/2012-ST. dated 20.6.2012. As per the impugned order the cancellation charges retained by the appellant cannot be granted exemption under the said notification, because these charges are not towards provisions of any services as per the notification, but are in respect of services which have been defined as declared service as per Section 66 E (e). The issue involved in the matter is no longer res-integra and is covered by the following decisions: Lemon Tree Hotel [2020-TIOL-1114-CESTAT-Del] M P Poorva Kshetra Vidyut Ltd [2021 (2) TMI 821 CESTAT New Delhi) M P Audyogik Kendra Vikas Nigam Indore....
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....ave rightly held that the impugned transaction is in relation to the agreement for tolerating an act or a situation and is classifiable as declared service under Section 66E(e) of the Finance Act, 1994 and attracts Service Tax with full rate. The appeal be dismissed. 4.1 I have considered the impugned order along with the submissions made in appeal and during the course of arguments. 4.2 Impugned order records following findings: "7. I find from the records that the appellant in normal cases received consideration from their customers/ clients for booking rooms/ accommodation in their hotel and on occupation of the said room/ accommodation by the customers/ clients, the appellant discharges service tax on the said room charges so received under 'short-term accommodation service', after availing the abatement in terms of Notification No.26/2012-ST dated 20.6.2012. However, in cases of no show i.e. when the customers/clients do not turn up after making reservation of a room or exit early before the completion of the number of days booked, the appellant charges cancellation fees/room retention charges from the said customers/clients. The appellant disch....
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....e active or passive and would also include forbearance to act. Agreeing to an obligation to refrain from an act or to tolerate an act or a situation has been specifically listed as a declared service under Section 66E(e) of the Act. The appellant have relied upon the decision of Commissioner(Appeals) dated 30.11.2017, in the case of M/s. Apeejay Surendra Park Hotels Ltd, Hyderabad, wherein it was held that the decision of the original authority to treat cancellation charges as 'declared services" under Section 66E(e) of the Act and to charge tax on such value without abatement available on short-term accommodation service, to be legally unsustainable. I find that the said decision of Commissioner (Appeals) is based on Guidance Note paragraph.2.3.2 of the CBEC Education Guide 2012. It has been clarified in paragraph.1.2 of the said Education Guide that the said Guidance Note does not command the required legal backing to be binding on either side in any manner. As such, reliance placed on the said decision, does not serve the cause of the appellant. I therefore find that the service provided by the appellant rightly fails under the 'Declared Service' and the *room retent....
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....le before the actual provision of service * Advances that are retained by the service provider in the event of cancellation of contract of service by the service receiver become taxable as these represent consideration for a service that was agreed to be provided. 3.4.3 How do I know that the service provided by me is an exempt service? There are certain exemption notifications that have been issued under section 93 of the Act of which the main exemption no 25/2012-ST dated 20/6/12 has 39 heads (mega notification). If the service provided by you fits into the nature and description of services specified in these notifications then the service being provided by you is an exempted service. For the sake of convenience the proposed mega exemption has been reproduced at Exhibits A3 of this Guide. 3.4.4 Are declared services also covered by exemptions? Yes." From the above it is evident that the amounts retained by the appellant from the advances received for the provision of the taxable service on cancelation of the agreement to provide the service, are to be taxed under the same category of the taxable service which was agreed to be provi....
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.... whole amount or part of it. Accordingly, I hold that the retention amount (on cancellation made) by the appellant does not undergo a change after receipt. Accordingly, I hold that no service tax is attracted under the provisions of Section 66E(e) of the Finance Act. Accordingly, this ground is allowed in favour of the appellant. 4.5 In case of M P Poorva Kshetra Vidyut Ltd. [2021 (46) G.S.T.L. 409 (Tri. - Del.)] tribunal observed as follows: 26. The Tribunal, thereafter referred to a judgment of the European Court of Justice (First Chamber) in Case C-277/2005, in Societe Thermale d'Eugenic-les-Bains v. Ministere de I'Economie, des Finances et de I'Industrie as it dealt with the issue whether an obligation to refrain from an act or to tolerate an act or situation would result in supply of services when a sum paid as a deposit by a client to a hotelier, where the client exercises the cancellation option available to him and that sum is retained by the hotelier, can be regarded as consideration for the supply of a reservation service. The Tribunal also referred to its earlier decisions in M/s. K.N. Food Industries Pvt. Ltd. v. Commissioner of CGST and Central Excise Kanpu....
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....the essential characteristic of the service of transportation of passenger by air. In these circumstances, we do agree with the contention of the learned counsel for the appellants that the excess baggage charges are nothing but an integral part of the service of transport of passenger by air. 26. Having considered the rival contentions, I find that the issue before the Tribunal is with respect to accompanied baggage of the passenger in the course of Air travel. I find that the carrying of baggage by the appellant Airlines is incidental to the service being 'transport of passengers by Air' and the same is classifiable under Section 65(105)(zzn). There is no separate contract in the facts of the case for transport of goods (excess baggage). More particularly, in the case of agreement of transport of passengers by Air, there is no element of transport of unaccompanied goods. Thus, agreeing with the learned Member (Judicial), I hold that the excess baggage charges collected by the appellant Airlines is integral part of the service provided for 'transport of passengers by Air'. 4.7 CBIC has vide Circular No 178/10/2022-GST dated 3- 08.2022 clarified as follows: "4.....
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....upply and the costs involved in cancellation of the supply, such as in cancellation of reserved tickets by the Indian Railways. 11.2 Services such as transportation travel and tour constitute a bundle of services. The transportation service, for instance, starts with booking of the ticket for travel and lasts at least till exit of the passenger from the destination terminal. All services such as making available an online portal or convenient booking counters with basic facilities at the transportation terminal or in the city, to reserve the seats and issue tickets for reserved seats much in advance of the travel, giving preferred seats with or without extra cost, lounge and waiting room facilities at airports, railway stations and bus terminals, provision of basic necessities such as soap and other toiletries in the wash rooms, clean drinking water in the waiting area etc. form part and parcel of the transportation service; they constitute the various elements of passenger transportation service, a composite supply.. The facilitation service of allowing cancellation against payment of cancellation charges is also a natural part of this bundle. It is invariably supplied by....