Service Tax on Telephone Call charges collected by hotels, Service Tax

[sumeet tholle]

Sir,

One of the my client is 5 Star Hotel. They are collecting telephone call charegs from their customers but not collecting Service Tax extra and not paying ST on that to Govt.

They are doing this practice since a long time i.e. 8-10 years.

Audit Party asked them to pay Service Tax on Telephone Call charges collected under Business Auxiliary Service and the demand is for 5 years.

Is Servive tax Payable prior to 01/07/2012 ?

Pl. guide.

Thanks.

Sumeet

 

 

 

Posts / Replies

[Pradeep Khatri]

If this 5 star hotel is by adding markup while charing the telephone expenses to it's customer then you are liable to pay the tax on such charges, otherwise not.  There was a recent judgment of the Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India (2012) 12 TMI 150 (Delhi) which says that reimbursement of expenses would become the part of taxable amount for the purpose of calculating of Service Tax.