TaxTMI 
TaxTMI 
2026 (10) TMI 392
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.... of electricity charges. All the said services were observed to fall under the definition of "service" given in section 65B(44) of the Finance Act, 1994 [the Act] These services, otherwise, do not figure in the negative list of section 66D of the Act nor were found exempted except that serving of food and beverages under restaurant services is exempted as per Board's Circular No. 139/8/2011-TRU dated 01.05.2011. The department, therefore, alleged that serving food and beverages in hotel room and grand room is taxable, the appellant should have paid service tax. The service tax liability on this issue and two other issues calculated as follows: Nature of Service Period Service Tax to be recovered (in Rs.) Room 01.07.2012 to 31.03.2012 5,99,348 Grand Room 01.07.2012 to 31.03.2012 103 Spnsorship/Business Auxiliary Services 2010-11 to 2014-15 1,11,35,168 Electricity Charges 2010-11 to 2013-14 upto May 2013 7,64,491 2.1 Based on these observations that a show cause notice bearing no. 01/44/201/5495 dated 31.08.2015 was served upon the appellant proposing the demand of service tax amounting to Rs. 24,99,110/- for the period from 2010-11 to ....
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....the manufacturing companies and were compelled to purchase the same from the authorised retailers having permit to sell the same in that particular area on payment basis. Though the liquor manufacturing companies reimbursed these amounts to them in cash. Had this not been the situation, the liquor manufacturing companies would have sold their product directly to the appellant by offering purchase/trade discounts. The activity of appellant, otherwise, is primarily of sale of liquor and the use of branded accessories like ash tray, napkin holder, coasters etc. all are part of business activity and not amounts to rendering any service. The demand of service tax on this ground is also liable to be set aside. 4.2 While submitting about the service tax demand confirmed on the electricity charges it is mentioned that the appellant had entered into agreement with various entities for leasing out offices space/shops on their property. The appellant had provided electricity to such office spaces/shops and a sub-meter got installed in each premises. The electricity charges were collected by the appellant as per actual units consumed/as per reading from respective sub-meter. Thus electricit....
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....s in appellant's hotel premises. The branded table accessories of these liquor companies were assured by the appellant to be displayed at requisite places, in return of getting a fixed amount on quarterly basis. The said amount was definitely in exchange of providing the sponsorship service. The appellant's contention that the amount so received by them was cash incentive was incorrect and has rightly been set aside. A fixed sum for amount at a regular interval of each quarter cannot be called as profit/trade margin. The demand has rightly been confirmed. 5.2 With respect to electricity charges from the appellant's tenants, is alleged to be the supply of electricity from the appellant to its tenants while in course of provision of service of renting of immovable property, it is submitted that the activity is not merely sale of electricity but the service of supply thereof to which there is no exemption post negative list regime. The demand has rightly been confirmed. 5.3 Finally it is submitted that the possible outcome of nonpayment/short payment by the appellant despite rendering taxable service has resulted into evasion of tax. The same is rightly held to be an intentional....
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.... law for the time being in force" Section 65(105)(zzzzv) of the Act defines restaurant service as taxable. It reads as follows: "Sec. 65(105)(zzzzv): "Taxable service" means any service provided or to be provided to any person, by a restaurant, by whatever name called, having the facility of air-conditioning in any part of the establishment, at any time during the financial year, which has licence to serve alcoholic beverages, in relation to serving of food or beverage, including alcoholic beverages or both, in its premises." The bare perusal reveals that the act of serving food and beverages is taxable when its provided in a restaurant premises having facility of air-conditioning. Admittedly the service tax has been demanded for serving food in hotel rooms. Foremost the hotel room cannot be called as the restaurant. In addition it is appellant's submission that even the foods which was served in the room was not from the restaurant but from the separate service premises of the hotel. The department has not provided any evidence to the contrary thereto. Except that Circular No. 139/8/2012-TRU dated 10.05.2011, s.no. 3 is relied upon which reads as follows....
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...., however subject to certain conditions. The appellant is otherwise engaged in selling of liquor. The use of branded accessories of the client was part of business activity and not kind of service rendered by the appellant. we have perused the said agreement. The very first clause of such agreement with Pernard Richard reads as follows: "The contract will be for branding, promotion and listing exclusively of all our BII and BIO Brands. The Sayajl Hotels Ltd. will not have any kind of tie-up for branding with any other Liquor or Wine Company during this tenure for Quorum. As an exception it can continue with its existing tie ups with Beer and White Rum Companies as PRIPL does not operate in these categories. But if PRIPL decides to introduce its products in any category in which it is not currently operational, then it will have the first right to get the same Included in the tie-up on mutually decided terms." The bare perusal is sufficient to clarify that the agreement is not actually for purchase of liquor from the said company but for the promotion and branding of their products. Similarly in the annual contract with United Breweries clause 5 reads as follows: ....