TaxTMI 
TaxTMI 
2026 (3) TMI 847
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....Delhi, and was holding service tax registration. The appellant had entered into a specific Hotel operating Agreement with Hilton International Manage LLC USA (Hilton US) for the management and operation of their hotel. The Appellant was paying management/operator fees to Hilton US and its other foreign affiliates and discharging service tax under reverse charge mechanism. The management and operation of the hotel was carried out by the General Manager of the Hotel and by key department heads such as Finance, Human resources, sales and marketing etc., which was supervised by Hilton Hotel Management Services Pvt. Ltd. (Hilton India), an Indian affiliate company of Hilton Group which also provided managerial services to the Hotel without any supporting agreement. The Executive Committee also included the General Manager of the Hotel, who was a key person who managed all functions such as supervision of all hotel employees including their recruitment, selection and termination, purchases, budgeting and accounting, supervision of legal actions and matters related to operations of the Hotel. It appeared that instead of recovering the salary of these officials as part of the management fe....
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....ry as consideration for any service. He submitted that an offer when accepted by both the parties becomes an agreement when supported by consideration and if agreement is enforceable by law, it automatically became a contract. In terms of Agreement dated 25.02.2009, the appellant did not offer and Hilton overseas did not accept to construe the salary as consideration for any services. Thus, said salary cannot be included in 'gross amount charged' by Hilton overseas. Learned counsel further submitted that salary paid by the appellant to its employees bore no nexus to services rendered by Hilton US. Consequently, such salaries were not includible as 'gross amount charged' for 'such service provided by Hilton US. In terms of the Specific Hotel Operating Agreement dated 25.02.2009, Hilton US was merely engaged in providing 'management and operation services' to the Appellant in exchange for 'Operator fee'. 3.2 Learned counsel further submitted that the Appellant employed the General Manager and other department heads as its own employees, under a separate Employment Agreement, which demonstrates an employer employee relationship. Thus, the entire ....
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.... and extended period cannot be invoked. 4. Learned authorized representative reiterated the findings given in the Order-in-Original and Order-in-Appeal. He further submitted that the employment letters given to various General Managers of the Hotels were termed as "Nationally Mobile General Manager Employment agreement", which provided that the General Managers could be transferred to any place in India by Hilton India. The general Manager and his team were performing the functions of Hilton US and its affiliates envisaged under the Hotel Operations/Management Agreement and therefore de facto were employees or representatives of Hilton US. The Appellant could not write their annual performance appraisals. Learned authorized representative submitted that in order to claim the substantive right/benefit of CENVAT Credit, a person had to comply with the conditions prescribed in the Rules. He contended that the argument of revenue neutrality was accepted, the entire scheme of payment of taxes on reverse charge basis to become otiose. 4.1 Learned authorized representative further submitted that the Appellant had never disclosed the facts to the Department which came to the notice o....
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..... Empee Hotels Ltd. 103/2019 CH.N (ADC) dated December 05, 2019 Additional Commissioner of CGST & Central Excise, Chennai North Commissionerate Chennai, North Commissionerate 3 M/s. MPG Hotels and Infrastructure Ventures Pvt. Ltd. 14/2021-ST (DC) dated February 12, 2021 Deputy Commissioner, Central Tax & Central Excise Thiruvananthapuram 4 M/s. Archer Hospitality Pvt. Ltd. 79-ST/APPL/LKO/2021 dated February 16, 2021 Commissioner (Appeals) Customs, GST & Central Excise Lucknow 5 M/s. Umbel Properties Pvt. Ltd. 30/2021-22-CT dated September 28, 2021 Commissioner C.T. (Appeals-II) Bangalore 6 M/s. Suraj Inn Pvt. Ltd. 02/2022-23 dated April 07, 2022 Commissioner C.T. (Appeals-II) Bangalore 7 M/s. Writer L:ifestyle Pvt Ltd. SM/05/APPEALS-II/ME/2023-24 dated April 28, 2023 Commissioner (Appeals-II), CGST & Central Excise Mumbai 8 M/s. BD & P Hotels (India) Pvt. Ltd. 22/ME/DN-III/R-I/BD&P/SCN/DGCEI/Pune/260/18-19 dated July 28, 2023 Assistant Commissioner, Div-III, CGST & CX Mumbai From the above table, it is clear that in case of similarly placed hotel owners, the Department has held by ....
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....heads and the Appellant is that of employer-employee. Given this, it is a settled position of law that terms of the agreement are to be given supremacy while determining the nature of the relationship between the parties. 6.3. Our view is further strengthened by fact that the Appellant had fulfilled all the statutory obligations of an employer, viz., PF contribution, Form-16 of the employees. Compliance of such statutory requirements by the Appellant, all of which clearly establishes the relationship of employer-employee between the Appellant and the GM and other department heads. We draw support from the decision of the Tribunal in the case of M/s Allied Blenders and Distillers Pvt. Ltd. v. Commissioner of Central Excise & Service Tax- 2019(1) TMI 433 - CESTAT Mumbai, wherein, the Tribunal relied on the fact that statutory obligations of an employer were fulfilled by the appellant and thus the directors were to be considered as employees of the appellant company. The relevant paras are reproduced below: "15. We do not find merit in the argument of the Revenue inasmuch as during the course of investigation, the statement of Shri Atit Dalai, Vice President (Finance....
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....tax is chargeable on any taxable service with reference to its value, then such value shall: (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; ..... Explanation. - For the purposes of this section: (a) "consideration" includes: (i) any amount that is payable for the taxable services provided or to be provided; (ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed; (c) "gross amount charged" includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment, and any amount credited or debited, as the case may be, to any account, whether called "Suspense account" or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise." 6.5 O....