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2019 (9) TMI 670 - AT - Service TaxRecovery proceedings - demand of service tax - management consultancy service - fees paid to Hyatt International for the operation of Hotel - Business Auxiliary Service - miscellaneous payment to Hyatt International - Maintenance or repair service - subscription and maintenance of Software - Business Auxiliary Service - Reservation expenses, Hyatt Gold Passport, Hyatt chain services - Interior Decorator Service - penalty on Design and Consultancy charges - penalty on Advertising Agency Service - Business Auxiliary service - Currency Conversion Fee - Convention Centre Services - miscellaneous Revenue like photocopies etc - Management consultancy service - fees paid to Hyatt International for the operation of Hotel - period 18 April, 2006 to 31 March, 2007 - HELD THAT:- In the present case, as the period in dispute is from 18 April, 2006 to 31 March, 2007, the definition of ‘management consultant’, as it stood prior to 01 June, 2007 would be relevant - Hyatt International carries out the operation and management of the hotel for the Appellant under the agreement. It is not engaged in providing any service in connection with the management of the hotel. It is itself running the hotel. Hyatt International also does not render any advice, consultancy or technical assistance to the Appellant. It needs to be noted that actual running or managing an organization cannot be the same as providing any service in connection with the management of the organization. It is difficult to comprehend, on a plain reading of the agreement, that Hyatt International is providing any service to the Appellant as a ‘management consultant’. - Hyatt International is not providing any service of a ‘management consultant’ to the Appellant - Demand do not sustain. Business Auxiliary Service - miscellaneous payment to Hyatt International - period is from 18 April, 2006 to 31 March, 2007 - HELD THAT:- Only such amount is subject to service tax which represents consideration for provision of service and any other amount which is not a consideration for provision of service cannot be subjected to service tax - the service tax is on the “value of taxable services” and, therefore, it is the value of the services which are actually rendered which has to be ascertained for the purpose of calculating the service tax - the value of material which is supplied free by the service recipient cannot be treated as “gross amount charged” as that is not a “consideration” for rendering the service - the expenses which are reimbursed, cannot be subjected to levy of Service Tax under ‘business auxiliary service’ - demand do not sustain. Maintenance or repair service - subscription and maintenance of Software - period 18 August, 2006 to 31 March, 2007 - HELD THAT:- The impugned order has taken into consideration the ‘Explanation’ that provides that ‘goods’ would include ‘Computer Software’, even though this Explanation was added w.e.f 01 June, 2007 and the period in dispute is from 18 August, 2006 to 31 March, 2007 - It is, therefore, not possible to sustain the demand made by the Commissioner under this head. Business Auxiliary Service - Reservation expenses, Hyatt Gold Passport, Hyatt chain services - period involved is from 18 April, 2006 to 31 March, 2007 - HELD THAT:- It is seen that M/s Hyatt Chain Services Ltd. undertakes certain promotion activities for the Hyatt Chain of hotels and thereafter passes on the cost to the hotels on actual basis. Thus, the arrangement is of sharing of joint promotional expenses at a global level. Even under the ‘Hyatt Gold Passport Program’, the members of the program are provided exclusive services, benefits, and promotions at the Hyatt hotels. The participating hotels are jointly promoting their business by organizing the said program and offering bonus points to guests availing facilities in their hotels. The settlement between the hotels where the bonus points are earned and the hotel where the bonus points are redeemed is facilitated by Hyatt Corporation - It was found that the arrangement was such that all the group companies would benefit for such expenses which, though initially borne by the Appellant, were subsequently shared. Thus, there was no scope for imposition of tax liability on the Appellant under the category of ‘business auxiliary service’ - In the present case the Commissioner after noticing the contention of the Appellant merely observed, without giving any reasons, that all the services were covered under the definition of ‘business auxiliary service’. This apart, no particular clause of the definition of ‘business auxiliary service’ was referred to - it is not possible to sustain the confirmation of demand under this head. Imposition of penalty - Interior Decorator Service - Design and Consultancy charges - HELD THAT:- The taxable service under the aforesaid Section 66A has to be treated as if the recipient had himself provided the service in India. The impugned order seeks to levy Service Tax upon the Appellant as a service recipient. There was a confusion regarding imposition of tax on reverse charge basis and the legal position was finally settled by the Bombay High Court in INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA [2008 (12) TMI 41 - BOMBAY HIGH COURT] - the imposition of penalty under the impugned order under this head is not justified. Imposition of penalty - Advertising Agency Service - Reverse charge mechanism - HELD THAT:- The submissions advanced by the learned Counsel for the Appellant for contesting the penalty under this head are the same as advanced for contesting the penalty under the earlier head ‘Design and Consultancy Charges’. For the reasons stated, while dealing with imposition of penalty under the said head, the imposition of penalty under this head cannot also be sustained. Business Auxiliary service - Currency Conversion Fee - period is from 01 April, 2003 to 31 March, 2003 - HELD THAT:- In M/S MARUDHARA MOTORS VERSUS CCE JAIPUR [2018 (1) TMI 1216 - CESTAT NEW DELHI] a Division Bench of the Tribunal examined whether document processing charges received from the buyer of the vehicle could be subjected to levy of Service Tax under ‘business auxiliary services’. The Tribunal found that service was being provided to a client for and on behalf of the financial institutions or banks. It was for providing documentation that charges were claimed from the customers and since there was no involvement of any third party on whose behalf service could be said to have been provided to the customers, Service Tax could not have been demanded under ‘business auxiliary services’ - demand set aside. Convention Centre Services - miscellaneous Revenue like photocopies etc - period is from 01 October, 2002 to 31 March, 2004 - HELD THAT:- The aforesaid charges collected by the Appellant from the hotel guests do not in any manner whatsoever relate to holding of a convention. Convention, means a formal meeting or assembly which is not open to the general public. The levy of charges under this head, therefore, cannot be sustained. Appeal allowed in part.
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