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2018 (10) TMI 656 - AT - Service TaxRenting of Immovable Property Services or not - assignment of entire business of the hotel to IHCL - scope of definition - immovable property buildings used for the purpose of accommodation including hotels, whether comes within the scope of Renting of immovable property or not? - Nature of receipt of License fee. Held that:- The renting of immovable property as defined in Section 65 (90a) of the Finance Act includes renting, letting leasing, licensing or similar arrangements of immovable property. In the present case, however, the agreement between the appellant and IHCL is not merely for renting of the hotel or land appurtenant thereto etc., but is “license to run, conduct and operate Connemara hotel together with all the related facilities and business appertaining thereto”. It appears to reason that not just the immovable property portion of the hotel, but also, the employees and other staff, goodwill and other paraphernalia are also taken into consideration by the two parties involved while framing the license agreement. It is also relevant to note that there is no “fixed rent” that is payable as would be expected in a normal renting of immovable property transaction - the license fee that would accrue to the appellant is only a percentage of the turnover. Since the turnover is never static but is dynamic and will go up or down in every succeeding year, the “lease license fees” would also wax or wane in resonance. In the recent decision in the case of Ex Maharani Mahendra Kumari Vs CCE & ST Jaipur [2017 (4) TMI 1136 - CESTAT NEW DELHI] presided over by the then president of CESTAT, the Tribunal further ruled that presence of other incidental facilities related to entertainment, personal care etc. does not exclude the building from the category of “hotel”. Time limitation - Held that:- Verifications had been initiated with SIHL as far back as on 09.11.2005. However in spite of SIHL having given all the necessary clarification through their letters dt. 15.12.2005 and 26.06.2006, including copies of the agreement concerned, the department did not issue the SCN till 17.03.2014. Hence the proceedings are clearly hit by limitation. Appeal allowed - decided in favor of appellant.
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