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2023 (6) TMI 414 - AT - Service TaxLevy of Service Tax - Renting of Immovable Property Service or not - whether the appellant is liable to pay service tax under the category of ‘Renting of Immovable Property Services’ for the amounts received from GRT? - HELD THAT:- As per the agreement there is no fixed assured rent paid to the appellant by GRT. A sum calculated as 20% of the ‘Gross Room Income’ and all other income, except food and beverage income and 15% on the food and beverage income derived from the hotel has to be paid on a monthly basis. It is also stated that room income, food or beverage income and other income derived shall be called as ‘Gross Turnover of the Hotel’. It is thus sharing of profit of the business of the hotel and not a consideration paid for renting of the Hotel Building. If the business is at a loss or suppose the hotel has to be closed down (for eg., in a situation like lockdown during COVID-19) there may not be any income for the hotel. The appellant then does not get any consideration. Whereas in a situation of renting of immovable property, the consideration is for the service of providing renting of immovable property - the rent is paid all along when the transfer of right in the immovable property is active and alive. Similar arrangement of licence granted to operate and run a Hotel was considered by the Tribunal in the case of GRAND ROYALE ENTERPRISES LTD. VERSUS COMMISSIONER OF SERVICE TAX-I CHENNAI [2018 (10) TMI 656 - CESTAT CHENNAI]. The Tribunal had set aside the demand and relied upon the decisions of the Tribunal in the case of AMBIENCE CONSTRUCTIONS INDIA LTD. VERSUS THE COMMISSIONER OF SERVICE TAX HYDERABAD [2012 (11) TMI 653 - CESTAT BANGALORE] and M/S JAI MAHAL HOTELS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [2014 (7) TMI 540 - CESTAT NEW DELHI] - The above decision of the Tribunal in the case of Grand Royale Enterprises (supra) was affirmed by the Hon’ble Supreme Court in COMMISSIONER OF SERVICE TAX 1 CHENNAI VERSUS GRAND ROYALE ENTERPRISES LTD. [2022 (9) TMI 273 - SC ORDER]. After analysing the facts, evidence and applying the decision in the case of Grand Royale Enterprises as affirmed by the Hon’ble Apex Court, it is opined that the demands cannot sustain - Appeal allowed.
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