2026 (4) TMI 1001

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....The appellant is engaged in hotel and hospitality business and during the course of providing short term accommodation services, the appellant received advances from its customers for booking of rooms. As and when the advances are received, the appellant discharges service tax liability in terms of Rule 3 Point of Taxation Rules, 2011. As per the conditions of booking, the room is kept reserved for a customer, however, if the customer does not show up, the advance amount deposited by the customer is forfeited by the appellant as penal charges so as to make good for the losses incurred on account of such breach by the customer in the form of 'room retention charges'. 3. Both sides agreed that the issue is no longer res integra and has bee....

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.... 14. However, the agreement here was different. The agreement was for giving the hotel room for accommodation by the client. In such a case, respondent could be the service provider and its client who is the service recipient. The enjoyment of the room/suite for the period would be the consideration which the client would receive and the amount paid as tariff would be consideration received by the respondent. Sometimes, the client, after booking the room, cancels it or stays for a shorter period. Having already reserved and blocked that room for the client, the respondent would lose on account of lack of business. Thus, the agreement was for letting the guest enjoy the room in lieu of the tariff. If the guest reneges from the reser....