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2023 (7) TMI 583 - AT - Service TaxLevy of Service tax - renting of immovable property service - grant of sole and exclusive right to recommence the hotel and to run, conduct, manage operate and market the same in the name and style as Palmgrove may from time to time in its absolute discretion deem fit - extended period of limitation - HELD THAT:- A principle for interpretation of an activity, is that the nomenclature assigned to it is not decisive of its nature. Further the fact that a method of payment is worked out or calculated in a particular manner, as a consideration for the agreement, as per the convenience of the parties involved, is not in itself determinative of the nature of the service being offered. The method of collection of consideration does not affect the essence of the service so long as a service is actually rendered. As per the agreement the hotel is run, conducted, maintained and managed by the conductor / operator at the costs, risks, expenses and responsibility of the conductor / operator alone and on a principal-to-principal basis. The appellant has also averred that Section 65(90a) of the Finance Act, 1994 as amended defines ‘renting of immovable property’ and Section 65(105)(zzzz) of the Finance Act, 1994 defines ‘taxable service’ provided in relation to renting of immovable property. In terms of Section 65(105)(zzzz) ‘hotels’ are specifically excluded under clause (d) to Explanation 1 of Section 65(105)(zzzz). The words ‘including hotels’ used in the Explanation to Section 65(105)(zzzz) of the Finance Act, 1994 while listing out the exclusions from the scope, has to be given its plain meaning. The issue have been examined in the Coordinate Bench decision in Grand Royale Enterprises [2018 (10) TMI 656 - CESTAT CHENNAI] where it was held that the transaction between the appellant and IHCL is definitely not one of “renting of immovable property” but a business transaction between the two, where the consideration is not like a regular rent but is dependent on the annual performance and profits of the hotel. The said judgment was affirmed by the Hon’ble Apex court in COMMISSIONER OF SERVICE TAX 1 CHENNAI VERSUS GRAND ROYALE ENTERPRISES LTD. [2022 (9) TMI 273 - SC ORDER], hence the same is binding on us and we respectfully follow the ratio of the said case laws and hold that Revenue’s stand that Service Tax is liable for renting of the impugned property is not correct and is untenable in law. The matter having been decided in the appellants favour, the question of limitation does not arise - appeal allowed.
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