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2019 (7) TMI 767 - AT - Service TaxTaxability - activity of agreeing to the obligation to refrain from an act, or to tolerate an act - forfeiture of advance received from a customer for booking of a room in a hotel, on the cancellation of the booking, by way of cancellation charges - Section 66 E(e) of Finance Act, 1994 - HELD THAT:- Admittedly, the customers pay an amount to the appellant in order to avail the hotel accommodation services, and not for agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and chargeable on full value and not on abated value. The amount retained by the appellant is for, as they have kept their services available for the accommodation, and if in any case, the customers could not avail the same, thus, under the terms of the contract, they are entitled to retain the whole amount or part of it - the retention amount (on cancellation made) by the appellant does not undergo a change after receipt - no service tax is attracted under the provisions of Section 66 E(e) of the Finance Act. Taxability - service tax on food served in the room - HELD THAT:- The service tax can be levied if there is an element of “Service” involved which would typically be the case where the food is served in restaurant. The element of service is not involved and it amounts to sale and does not attract service tax - Admittedly, it is the case of the Department that the appellant has provided food in the rooms, which is not included in the room service - amount not taxable. Appeal allowed - decided in favor of appellant.
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