TMI Blog2019 (9) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed period August, 2008 to 30.06.2012, the appellant is not liable to service tax. For the period from 1.7.2012, the appellants have admittedly deposited the service tax and has not disputed their liability, subject to abatement. The appellant, as provided in Notification No.26/2012-ST, is entitled to abatement of 40% and is liable for service tax only on the balance receipt of 60% with respect to the lease rent of the hotel. Supply of Tangible goods service - demand of service tax - HELD THAT:- The amount received per annum is not wholly for supply of tangible goods, as the plant and machinery, which are embedded to the earth and the fixtures and fittings, which cannot be removed without cannibalising them, and their removal may destruct, is not classifiable as goods, as the same are immovable - the appellant shall not be liable to service tax under the category of SOTG on the goods which are present in the hotel premises, which are immovable in nature - this issue is remanded to the Adjudicating Authority for a re-determination. Penalties - HELD THAT:- The issue is wholly interpretational in nature. Further, the transaction is duly recorded in the books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Excise Department till September, 2011. (c) Appellants have rented their premises at Corbett, Naukuchiyatal to M/s. Club Mahendra Holidays Resorts India Ltd., on lease and have not paid the service tax upto June, 2012. Thereafter, appellants have paid service tax after availing abatement of 40%. It was mentioned that the facility of bar, swimming pool, restaurant, fitness centre etc. are all part and parcel of the hotel. (d) The amount received on account of hiring of plant and machinery is not covered under supply of tangible goods services, as the said goods remained under the possession and control of M/s.Mahendra Holidays Resorts India Ltd. (e) Service tax of ₹ 24,38,245/- has been paid after the visit of Central Preventive Officers on 18-09-2013. Appellants have opted for VCES Scheme for the remaining tax. 4. Against the aforesaid factual background, a show cause notice dt. 23-04-2014 (Annexure 3) was issued proposing to demand service tax ₹ 1,43,21,974/- towards service tax on the amount received during 01-04-2008 to 31-08-2013 under proviso to section 73(1) of Finance Act, 1994. It also prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds services, does not appear to be correct. (f) From perusal of terms and condition of the lease deed, it appears that right to use is not transferred as appellants retain the permissions and license relating to resort, including plant/machinery and other appliances. (g) Even though the custody have been transferred along with permission to use the property, M/s Mahendra Holidays Resorts India Ltd is not free to use the property including equipments in any manner as they like and conditions have been imposed on their use and control. (h) The transaction does not involve transfer of right to use the property and equipments, as in terms of agreement the possession and effective control over them has not been transferred. (i) Appellants have accepted that they were not paying VAT on transaction described as supply of other assets/appliances with no VAT/SALES TAX charged or paid. They themselves have not considered the transaction as deemed sale. (j) Appellants have contravened provision of section 68 (payment of service tax), section 69 (not obtaining registration during 2008-09 to 2012-13) section 70(non fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mended retrospectively by Finance Act, 2010. However, the exclusion for hotels in Clause (d) in Explanation (1) continued. 8. Ld. Counsel further states that the Commissioner has erred in holding that the appellant s hotel provides other facilities like swimming pool, bar and restaurant, conference halls, etc. Thus, the building is not solely used for the purpose of accommodation as these are commercial in nature. Ld. Counsel submits that the facilities of swimming pool, bar and restaurants, conference, etc. available at the hotels are for the persons residing therein exclusively. Moreover, these facilities do not change the nature of building, which is a hotel. Ld. Counsel further relies on the clarificatory circular /letter DOF No.334/I/TRU dated 28.02.2007 issued by CBEC, wherein in Clause 6.3, with regard to taxation of renting of immovable property services, it has been clarified that the immovable property excluded from the scope of the services are residential accommodation such as hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities, among others. Ld. Counsel further relies on the precedent ruling of this Tribunal in Jai Mahal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the levy of service tax. Service tax under SOTG is applicable when the goods are provided for use without transfer of right to possession and effective control. Ld. Commissioner has erred in holding that even though the custody /possession has been transferred along with right to use, Mahendra Holiday is not free to use the goods including the equipments, in any manner, as they are liable, and conditions have been imposed on their use and control. Further, the appellant has admittedly not paid any VAT. Ld. Counsel states that non-payment of VAT is not a pre-condition for applicability of liability under service tax. Further, reliance is placed on the ruling of this Tribunal in the case of Chattisgarh Earth Movers 2017 (6) GSTL 297 (T) and Brahmaputra Valley Construction Suppliers -2018 (14) GSTL 355 (T). 12. Ld. Counsel further urges under the admitted facts that the appellant neither charged nor collected service tax, cum-duty benefit, which is allowable for the entire period. Further, under the facts and circumstances, the issue is debatable and one of interpretation, the extended period of limitation is not invokable. Further, the penalty under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el is covered by the Exclusionary Clause and does not amount to an immovable property, falling within the ambit of taxable service. Accordingly, it is held that for the part of the disputed period August, 2008 to 30.06.2012, the appellant is not liable to service tax. For the period from 1.7.2012, the appellants have admittedly deposited the service tax and has not disputed their liability, subject to abatement. Under the facts and circumstances, we hold that the appellant, as provided in Notification No.26/2012-ST, is entitled to abatement of 40% and is liable for service tax only on the balance receipt of 60% with respect to the lease rent of the hotel. 14. So far as the liability to service tax under SOTG is concerned, under the facts and circumstances, it appears that the amount received per annum is not wholly for supply of tangible goods, as the plant and machinery, which are embedded to the earth and the fixtures and fittings, which cannot be removed without cannibalising them, and their removal may destruct, is not classifiable as goods, as the same are immovable. We further find that as the appellant remains owner of the hotel premises, the goods or fittings ..... X X X X Extracts X X X X X X X X Extracts X X X X
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