TMI Blog2018 (10) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... eement. It is also relevant to note that there is no fixed rent that is payable as would be expected in a normal renting of immovable property transaction - the license fee that would accrue to the appellant is only a percentage of the turnover. Since the turnover is never static but is dynamic and will go up or down in every succeeding year, the lease license fees would also wax or wane in resonance. In the recent decision in the case of Ex Maharani Mahendra Kumari Vs CCE ST Jaipur [2017 (4) TMI 1136 - CESTAT NEW DELHI] presided over by the then president of CESTAT, the Tribunal further ruled that presence of other incidental facilities related to entertainment, personal care etc. does not exclude the building from the category of hotel . Time limitation - Held that:- Verifications had been initiated with SIHL as far back as on 09.11.2005. However in spite of SIHL having given all the necessary clarification through their letters dt. 15.12.2005 and 26.06.2006, including copies of the agreement concerned, the department did not issue the SCN till 17.03.2014. Hence the proceedings are clearly hit by limitation. Appeal allowed - decided in favor of appellant. - ST/4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the immovable property for conducting hotel and other related business for furtherance of business or commerce against license fee, hence the appellants are liable for payment of service tax under Renting of Immovable Property Service w.e.f. 01.06.2007. Accordingly, proceedings were initiated by issue of a SCN dt. 17.03.2014 wherein inter alia, service tax liability of ₹ 3,21,94,224/- under the category of Renting of Immovable Property Service for the period 2009-10, 2011-12 and 2012-13 was proposed to be demanded with interest thereon. SCN also proposed imposition of penalties under Section 76, 77 78 of the Finance Act,1994. In adjudication, the Commissioner vide impugned order dt. 09.03.2015 confirmed demand of ₹ 2,51,85,330/- with interest thereon, imposed equal penalty under Section 78 ibid and also imposed penalty under Section 77 (1) and 77 (2) ibid. Aggrieved the appellants are before this forum. 2. Today when the matter came up for hearing, on behalf of the appellant, Shri Sachin Chitnis, Ld. Advocate made oral and written submissions which can be broadly summarized as under :- i) In the definition of Renting of Immovable Property Services under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases are squarely applicable to the present case, as licensee in all the above cases (except in Ambience Constructions (supra) is IHCL and the license agreement in all these cases are worded similarly. v) As an alternative plea, the proceedings per se are hit by limitation. In response to a letter dt. 09.11.2005 issued by the Superintendent, SIV Chennai, the erstwhile owners SHIL vide their letter dt. 15.12.2005 had given the information sought and also attached balance sheets for the years 2003-04 and 2005-06 . Vide a further letter dt. 26.06.2006, the Superintendent (SIV), Chennai requested for copies of the license agreement dated 20.3.1984 entered into between SHIL and IHCL, details of license fee received from IHCL during the years 2003-04, 2004-05 and 2005-06, details of service charges received for the same period and details of payment made to holding company namely Spencer Co. All these required details were submitted by letter of SHIL dt. 26.06.2006. Although all the information had been submitted, the SCN was issued only on 17.03.2014 for the period 2009-10 to 2012-13. Based on the same agreement dt. 27.06.1984 between SHIL and IHCL and subsequent agreement dt. 18/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes --- (i) building and part of a building, and the land appurtenant thereto; (ii) land incidental to the use of such building or part of a building; (iii) the common or shared areas and facilities relating thereto; and (iv) in case of a building located in a complex or an industrial estate, all common areas and facilities relating thereto, within such complex or estate, (v) vacant land, given on lease or license for construction of building or temporary structure at a later stage to be used for furtherance of business or commerce; but does not include - (a) vacant land solely used for agriculture, aquaculture, farming, forestry, animal husbandry, mining purposes; (b) vacant land, whether or not having facilities clearly incidental to the use of such vacant land; (c) land used for educational, sports, circus, entertainment and parking purposes; and (d) building used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities. Explanation 2- For the purposes of this sub-clause, an immovable property partly for use in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Authorities below is fundamentally flawed. The taxable service falling within the scope of Section 65(90a) and enumerated to be a taxable service under Section 65(105)(zzzz) is the renting of immovable property. A reading of clause (90a) and clause (zzzz) would indicate that a complex drafting methodology is adopted. Even in clause (90a) there are inclusionary and exclusionary clauses. Under this provision renting of immovable property or similar arrangement for use in course of or furtherance of business or commerce but excluding renting of immovable property by a religious body or to a religions body; renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre, are excluded. The Explanation under clause (90a) further defines the expression for use in the course or business or commerce and also incorporate a clarificatory clause for removal of doubts, not necessary for the purposes of these appeals. Similarly, in clause (zzzz) there are inclusionary or exclusionary clauses embedded. 10. On a true and fair construction of provisions of the exclusionary clause u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal found that there is no dispute on the fact that the entire property / space is used as hotel only and hence relying on jai Mahal Hotels decision (supra). The Tribunal held that Revenue s stand that service tax is liable for renting of subject property is not correct and is untenable in law. 5.7 Even in the recent decision in the case of Ex Maharani Mahendra Kumari Vs CCE ST Jaipur (supra) presided over by the then president of CESTAT, the Tribunal further ruled that presence of other incidental facilities related to entertainment, personal care etc. does not exclude the building from the category of hotel . The relevant portion of the decision is as under : 6. The appellants claimed exclusion under the category of buildings used for the purpose of accommodation including hotels. Admittedly, the building and the land as appurtenant thereto are used for the purpose of running the hotel. The term hotel is not defined in the Finance Act, 1994. As generally understood, a hotel is for temporary accommodation of people paying for their rooms and meal. Many hotels will have various other incidental facilities relating to entertainment, personal care, etc. The presenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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