TMI Blog2019 (9) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provider 01.10.02 to 31.03.04 5,95,354 2 Currency conversion fee Business Auxiliary Service Service provider 01.04.03 to 31.03.05 4,48,907 3 Advertising agency services Advertising Agency Service Service recipient 18.04.06 to 31.03.07 34,269 4 Design and consultancy charges Interior Decorator Service Service recipient 18.04.06 to 31.03.07 10,14,904 5 Reservation expenses, Hyatt Gold Passport, Hyatt Chain services Maintenance or Repair Service Service recipient 18.04.06 to 31.03.07 63,69,613 6 Subscription and maintenance of software Management or Repair Service Service recipient 18.04.06 to 31.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These services are ancillary to convention services provided by the appellant. 2 Business Auxiliary Service Other income shown in the financial statements which comprised of- (a) Charges recovered from guests for cash encashment through credit card and Forex encashment (a) (b) Other Misc. revenue from guests like loss of key, bath rob sales, etc. (b) (c) Other amounts (c) 1.07.2003 to 31.03.2007 7,81,682/- The Appellant paid service tax on a part of income under this head w.e.f. 2005-06. Hence, the Appellant is liable to pay tax from 1.7.2003 onwards. 3 Credit Card, Debit Card, Charge Card or Other Payment Card service Club At The Hyatt (CATH)-Food Beverages Discount Card revenue received from guests 1.05.2006 to 31.03.2007 19,83,062/- The fee collected for allowing discount on food and beverages consumed at Hotel is liable to tax under credit card, debit card, charge card or other payment card services . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Management consultancy service - Management fee paid to Hyatt International in terms of Sales Marketing and Management Service Agreement 1.10.2002 to 31.3.2007 2,35,78,805/- Management fee is consideration for management consultancy services . The Appellant is a service receiver. 10. Business Auxiliary service Misc. payments made in foreign currency comprising of following: (a) Payroll related charges (b) Training charges (c) Salary of foreign chefs (d) Fee paid to foreign musicians (e) Credit card payments (f) Software subscription charges (g) Traveling, boarding lodging of employees (h) Others 1.7.2003 to 31.3.2007 64,41,015/- These are in the nature of services arranged by Hyatt International for the operation of hotels as per Section 4 of the Sales Marketing and Management Services Agreement. Hence, the Appellant is liable to pay Service Tax under business auxiliary service . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... att Regency Delhi ; and WHEREAS , Owner and Hyatt desire to enter into this agreement for such sales and marketing and management services to the Hotel by Hyatt, upon the terms and conditions hereinafter set forth; NOW THEREFORE, the parties hereto covenant and agree as follows: ---------------------- ARTICLE III OPERATION OF THE HOTEL Section 1. Standards of Operation. Hyatt, through the General Manager, as hereinafter defined, shall operate the Hotel under standards comparable to those prevailing in H.I. hotels and for all activities in connection, therewith which are customary and usual to such an operation, and shall conduct such operations in accordance with the laws of India and, insofar as feasible and in its opinion advisable, local character and traditions. Section 2. Hyatt control of Operation. Subject to the terms of this agreement, Hyatt, through the General Manager, shall have complete control and discretion in the operation of the Hotel. Nothing herein shall constitute or be construed to be or to create a partnership of joint venture between Owner and Hyatt, and the right of Owner to receive financial returns based upon the operation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintenance, telephone and telex services, vermin extermination, security protection, garbage removal and other services necessary for the operation of the Hotel, and for the purchase of all food, beverages, operating supplies and expendables and such other services and merchandise necessary for the proper operation of the Hotel; (e) Purchase, in accordance with the Annual Plan, the Furnishings and Equipments, Operating Equipment and all foreign imported items. (f) Provide appropriate sales and marketing services including definition of polices, determination of annual and long-term objectives for occupancy, rates, revenues, clientele structure, sales terms and methods; (g) Provide appropriate advertising and promotional services including definition of policies and preparation of advertising and promotional brochures (folders, leaflets, tariffs and fact sheets, guide books, maps, etc. to be distributed in H.I. hotels and sales offices; (h) Cause its affiliates to furnish sales and marketing services, such as Chain Marketing services, centralized reservation services, the Hyatt Gold Passport Program (excluding and domestic Gold Passport program in India) (if H.I. or any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his duties under this agreement, the General Manager shall have the right, as agent for owner, to incur expenses and to enter into contracts with third parties in the ordinary course of business of the Hotel and in accordance with the Annual Plan, during the Operating Term, which contracts shall include, without limitation, contracts for sales of rooms, food and beverages and other facilities of the Hotel, the purchase of food and beverages and Operating Supplies, employment of personnel, advertising and business promotion, repairs and maintenance, administration, heat, light and power, insurance legal and accounting services, and other goods and services. Hyatt and/or the General Manager shall consult with Owner prior to entering into my contract for the purchase of goods and services (other than employment contracts) having a term in excess of one (1) year, and owner shall have the right to approve any contract for the purchase of goods and services having a term in excess of two (2) years. Any such contracts entered into by the General Manager, on behalf of Owner shall be honoured by Owner if they shall survive the expiration or earlier termination of this agreement. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees at meetings and seminars conducted by members of the H.I. group and the Chain Marketing Services provided in accordance with Section 2 of Article VII, and (b) irrespective whether such funds shall be paid to any third party or to any member of the H.I. group of any other hotels Operated by any member of the H.I. group. If any member of the H.I. group or any hotel operated by any member of the H.I. group shall advance its own funds as aforesaid, it shall be entitled to prompt reimbursement therefore by the Hotel. Any amount required to be reimbursed to Hyatt or H.I. or any of its affiliates in accordance with the provisions of this agreement shall be payable in United States dollars. All foreign charges and expenses incurred on behalf of the Hotel shall be approved by Owner, which approval shall not be unreasonably withheld. Section 11. Employees of the Hotel. (a) Each employee of the Hotel shall be the employee of Owner and not of Hyatt, and Hyatt shall not be liable to such employees for their wages or compensation. Owner shall delegate to the General Manager the authority to employ, pay, supervise and discharge employees of the Hotel. (b) Subject to pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement Service fee ( Combined Fees ), per Subsections (A) and (B) above, shall exceed ten percent (10.0%) of the total annual foreign exchange earnings of the Hotel for such fiscal year, then Hyatt s Combined Fees shall be reduced by the difference between the Combined Fees and ten percent (10.0%) of the total annual foreign exchange earnings for such fiscal year. Section 2. Payment of Fees. Hyatt s sales and marketing and management services fees shall be determined in the currency of India shall be payable in United States dollars, converted at the official selling rate of exchange, as quoted by the State Bank of India, prevailing on the date of payment, and shall be made within thirty (30) days after the end of each calendar month or fiscal quarter, as the case may be. In the event that payment of Hyatt s fees is not made within the respective specified periods, then such fees shall be converted at the official selling rate of exchange, as quoted by the State Bank of India, prevailing on such dates as such fees shall be determined. Hyatt s sales and marketing and management services fees shall be subject to the deduction of income or withholding taxes which may be applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yments in foreign currency on account of management fee to M/s HIAPL, Hong Kong are squarely covered under the definition of Management Consultancy services and are liable to be taxed. I do not find any force in the other various contentions of the party and the relied upon judgments are also not relevant to the present facts and circumstances of the case. 9. The impugned order has confirmed the demand of Service Tax on the amount paid by the Appellant to Hyatt International as fees under the category of management consultant as a service recipient for the period 18 April, 2006 to 31 March, 2007. 10. Learned Counsel for the Appellant pointed out that the Appellant had entered into an agreement with Hyatt International for entrusting Hyatt International with the operation and management of its hotel, for which the Appellant had agreed to pay a specified amount of fee to Hyatt International for such activities as defined in Article IV of the Agreement. Learned Counsel submitted that the fees is paid by the Appellant to Hyatt International under an agreement and Hyatt International carries out the operation and management of the hotel for the Appellant under the said agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finition, the definition also includes, in its includes part, any person who renders any advice, consultancy or technical assistance, in relation to financial management, human resources management, marketing management, production management, logistic management, procurement and management of information technology resources or other similar areas of management; (vi) Further, both parts cannot be read conjunctively. What is included in the includes part is relatable only to the subject defined and takes within its sweep persons, objects, or things which are not included in the means part. In this connection, reliance has been placed upon a judgment of the Supreme Court in Commissioner of Central Excise, Hyderabad vs Detergent India Ltd. 2015 (319) ELT 559 (SC); and (vii) The decisions of the Tribunal in Basti Sugar Mills or Indian Hotels relied upon by the Appellant are not applicable to the facts and circumstances of the present case. 13. The submissions advanced by the learned Counsel for the Appellant and the learned Authorised Representative of the Department on this issue have been considered. 14. In order to appreciate the contentions, it would be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 6 of this Order. The relevant provisions are, however, highlighted and they are as follows : (i) Hyatt International through the General Manager shall operate the hotel under standards comparable to those prevailing in Hyatt International hotels and shall conduct such operations in accordance with the laws of India; (ii) Hyatt International through the General Manager shall have complete control and discretion in the operation of the hotel and nothing in the agreement shall constitute or be construed to be or to create a partnership of joint venture between the owner and Hyatt International. The control and discretion of Hyatt International, through the General Manager, shall include the use of the hotel for all customary purposes , terms of admittance, charges for rooms, entertainment and amusement, food and beverages, labour policies, wage rates and the hiring and discharging of employees, maintenance of the Hotel Operating Account and all phases of promotion and publicity relating to the hotel; (iii) Hyatt International, through the General Manager, shall operate in the hotel all facilities and provide all services and shall not lease or grant concessions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, observed that the Appellant was performing the activity of management of hotel and was not required to do any advisory service. Thus, the Appellant was not providing any management consultant service to Lokhandwala Hotels Pvt. Ltd. and accordingly, it was not liable to pay Service Tax under the category of management consultant . In coming to the aforesaid decision, the learned Member placed reliance upon an earlier decision of the Tribunal in Basti Sugar Mills Co. Ltd. The other Member constituting the Bench, however, did not agree with this view and held that the services rendered by Indian Hotels Co. Ltd. would be classified under management consultant service. The third Member, to whom the difference of opinion was referred to, observed, after perusing the clauses of the agreement, that the activity of Indian Hotels Co. Ltd. in operating the hotel cannot be called as a service under the category of management consultant service as Lokhandwala Hotels Pvt. Ltd. was being operated in its entirety by Indian Hotels Co. Ltd. The relevant portion of the decision is reproduced below : 53. If we look at the introductory part of the License Agreement between IHCL and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also being pointed out that this Tribunal dealt with a similar case in its decision in the case of Rolls Royce Industries Power (I) Ltd. v. CCE, Vishakhapatnam as reported in 2006 (3) S.T.R. 292 (Tri.) = 2004 (171) E.L.T. 189 (Tri. - Del.) and held that Service Tax as consultant is not attracted to a case where, under a contract, the operation and management of an industrial unit is taken over by a party. xxxxx xxxxx xxxxx 7. The above definition makes it clear that what is envisaged from a consultant is advisory service and not the actual performance of the management function. In the present case, the appellant was in-charge of the operation of the factory and thus was performing the management function. 8. An ocean separates a manager from a management consultant, a performer from an advisor or a coach. That ocean exists in the present case also. We dealt with a similar case in Rolls Royce Industries Power (I) Ltd. (Supra) and held that where the agreement conferred operational autonomy and responsibility on the contracted party, the relationship is not one of consultancy. The ratio of that decision covers the present dispute also. There is no management consult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Such a person would not be a person actually managing the affairs of the organization. In the includes part, a person who renders any advice, consultancy or technical assistance in relation to the areas of management would also be a management consultant . As noted above, Hyatt International cannot, in any manner, be said to be providing any advice, consultancy or technical assistance since it is itself running the hotel. The decision of the Supreme Court in Detergents India Ltd. will, therefore, not come to the aid of the Department. The Supreme Court pointed out that means and includes is a legislative device and the relevant portion of the judgment is reproduced below : 23. We find it difficult to agree with some of the conclusions reached in the aforesaid paragraph. As has been stated by us above, means and includes is a legislative device by which the includes part brings by way of extension various persons, categories, or things which would not otherwise have been included in the means part. If this is so, obviously both parts cannot be read conjunctively. What is in the includes part is relatable only to the subject that is to be defined and takes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part is a person who renders any advice, consultancy or technical assistance in relation to certain areas of management. It is the advice, consultancy or technical assistance which has to be in relation to the areas of management. Hyatt International, as noticed above, is not providing any advice, consultancy or technical assistance to the Appellant since it is itself is managing the hotel and so it would not be necessary to examine the scope of in relation to in this case. 31. In view of the aforesaid discussion, it has to be held that Hyatt International is not providing any service of a management consultant to the Appellant. The confirmation of demand under the head, therefore, cannot be sustained. SERIAL NO. 8 MISCELLANEOUS PAYMENT TO HYATT INTERNATIONAL -- BUSINESS AUXILIARY SERVICE 32. The findings recorded by the Commissioner under this head are contained in paragraph 32.4 of the Order and the relevant portion is as follows : 32.4 On careful perusal of the terms and conditions of the Agreement held between the party and M/s HIAPL, Hong Kong under the heading Management Services of Sales Marketing and Management Service Agreement , I find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department has, however, supported the findings recorded by the Commissioner under this head. 36. It has to be examined, whether demand of Service Tax on the expenses reimbursed to Hyatt International under the category of business auxiliary service is justified or not. The period is from 18 April, 2006 to 31 March, 2007 and, therefore, the definition of business auxiliary service under section 65(19) of the Act, as it stood at the relevant time, is reproduced below : Business Auxiliary Service means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; or (v) production or processing of goods for, or on behalf of the client; (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of Delhi accepted the said contention and declared Rule 5 to be ultra vires the provisions of Section 66 and 67 of the Act. The High Court noted that both the amended and unamended Section 67 authorised the determination of value of taxable services for the purpose of charging service tax under Section 66 as the gross amount charged by the service provider for such services provided or to be provided by him in a case where consideration for such service is money. The High Court placed emphasis on the words for such service and took the view that the charge of service tax under Section 66 has to be on the value of taxable service i.e. the value of service rendered by the assessee and the quantification of the value of service can, therefore, never exceed the gross amount charged by the service provider for the service provided by him. On that analogy, the High Court opined that the scope of Rule 5 goes beyond the scope of Section 67 which was impermissible as rules could be framed only for carrying out the provisions of Chapter 5 of the Act. In taking this view, the High Court observed that the expenditure or cost incurred by the service provider for providing the taxable se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SERIAL NO. 6 SUBSCRIPTION AND MAINTENANCE OF SOFTWARE -- MAINTENANCE OR REPAIR SERVICES 42. The findings recorded by the Commissioner under this head are contained in paragraph 30.2 of the Order and the relevant portion is as follows : On perusal of the party s submissions, I do not find any force in the contention of the party that Computer software is not goods and maintenance of such software was not liable to service tax under maintenance or repair service during the relevant period. Because vide circular F.No. 256/1/2006-CX-4 dated 07.03..06 the Board has categorically clarified that Service tax on maintenance repair of computer software is leviable w.e.f 09.07.04. Besides, this it has been specifically explained at Explanation (a) of Section 65(64) of the Act that, goods includes computer software. 43. The impugned order has confirmed the demand of Service Tax against the Appellant on expenses paid towards maintenance of software under the category of repair or maintenance services as a service recipient for the period 18 August, 2006 to 31 March, 2007. 44. Learned Counsel for the Appellant submitted that maintenance of software was not cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oftware would not be chargeable to Service Tax under the category of maintenance or repair . The Circular dated 17 December, 2003 is reproduced below : CIRCULAR NO. 70/19/2003-ST, DATED 17-12-2003 An issue has been raised whether the organisations who are engaged in design, development and maintenance of Software and enter into Annual Maintenance contracts for maintenance of their software, are exempt from Service Tax or not. 2. Maintenance or repair means any service provided by (i) any person under a maintenance contract or agreement or (ii) a manufacturer or any person authorised by him in relation to maintenance or repair or servicing of any goods or equipment. In the instant case repair is not of tangible goods but that of intangible program/software which is in installed condition and thus the maintenance and repair of software is not maintenance and repair of goods . Further an exemption has been granted to maintenance or repair services in relation to computer, computer systems and computer peripherals vide Notification No. 20/2003-ST dated 21.8.2003. As such computer software would form a part of computer systems would be covered under this notification. Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntellectual property namely software is incorporated in a media for use. Supreme Court has held that software in a media is goods. 4. Any service provided to a customer by any person in relation to maintenance or repair is leviable to service tax under section 65(105) (zzg) of the Finance act , 1994. Maintenance or repair is defined under section 65(64) of the said Act. Accordingly, maintenance or repair means any service provided in relation to maintenance or repair or servicing of any goods or equipment. 5 Software, being goods, any service in relation to maintenance or repair or servicing of software is leviable to service tax under section 65(105)(zzg) read with section 65 (64) of the Finance Act, 1994. 6. These instructions are issued taking into account the said decision of the Supreme Court, and in supersession of all earlier clarifications / circulars issued on the above subject. 50. This Circular dated 07 October, 2005 was assailed in a Writ Petition filed before the Madras High Court by Kasturi Sons Ltd. This Petition was filed for declaring the Circular dated 07 October, 2005 ultra vires to Section 83 of the Act. The High Court noticed that it is und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uter software, had been outside the purview of business auxiliary service , especially under Section 65 and the term, goods in the Finance Act, 2007 has included computer software under section 65(105)(zzg). However, under the impugned circular the second respondent placed reliance on the judgment of the Supreme Court in Tata Consultancy Service v. State of Andhra Pradesh [(2005) 1 SCC 308] to conclude that software being goods, any service relating to maintenance, repairing and servicing of the same is also liable for service tax. The Supreme Court in that case decided about the term, goods in the light of Andhra Pradesh General Sales Tax Act .. 9. While deciding the same, there was no occasion to consider the implications of the Finance Act 2003 to 2006 in respect of the terms information technology and maintenance of software . 22. In such view of the matter, the impugned circular is declared to have no application to the petitioner, as the same is opposed to the provisions of the Finance Act insofar as it relates to imposing of service tax on software relating to maintenance, repairing and servicing under the Finance Act, 1994 before the period of Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply to the SCN and definition of Business Auxiliary Services , I find that all such services are absolutely covered under the definition of business auxiliary service and hold that all such charges made in foreign currency are liable to service tax. I do not find any force in the various other contentions of the party and the relied upon judgments are also not relevant to the present facts and circumstances of the case. 55. The impugned order confirms the demand under business auxiliary service as a service recipient. The period involved is from 18 April, 2006 to 31 March, 2007. 56. Learned Counsel for the Appellant submitted that M/s Hyatt Chain Services Ltd. merely undertakes certain promotion activities for the Hyatt Chain of hotels as a whole and thereafter passes on the cost of the same to various Hyatt hotels on actual basis without any mark up. The arrangement between the Appellant and other Hyatt hotels is merely that of sharing of joint promotional expenses at a global level. In any case, the relation between the Appellant, other Hyatt hotels and M/s Hyatt Chain Services Ltd. is not that of a service provider and client. Thus, the activities undertaken by M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation. Learned Counsel for the Appellant, therefore, contended that the Commissioner was not justified in confirming the demand under this head and in support of this contention, learned Counsel placed reliance on a decision of the Tribunal in M/s Historic Resort Hotels Pvt. Ltd. vs Commissioner of Central Excise, Jaipur-II 2017-TIOL-3660-CESTAT-DEL. 59. The learned Authorized Representative of the Department, however, refuted the contentions advanced by the learned Counsel for the Appellant and submitted that the Commissioner was justified in confirming the demand under business auxiliary service . 60. 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 thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apparently, it would mean that the appellants received the service and acted as procurer of such service for or on behalf of the group companies. We find such inference is not factually as well as legally tenable. The appellant is not per se engaged in promoting sales or business of group companies. No evidence to that effect has been brought out. In fact, the arrangement is all group companies will benefit from a sales promotion and other related activities of third parties, for which expenses are to be borne by the appellant and thereafter to be shared with other group companies. In such arrangement, we find no scope for tax liability on the part of the appellant under the category of BAS. We also note that the original order did not identify under which sub-clause of the tax entry BAS, the service tax is sought to be confirmed. 62. The Tribunal in coming to aforesaid conclusion relied upon the judgment of the Supreme Court in M/s Gujarat State Fertilizers and Chemicals Ltd. Anr. Vs Commissioner of Central Excise 2016-TIOL-198-SC-ST wherein it was held that sharing of expenditure for common facilities cannot be treated as service by one to another. 63. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finally settled by the Bombay High Court in Indian National Shipping Owners Association vs Union of India 2009 (13) STR 235 (Bom). This decision was subsequently affirmed by the Supreme Court in Union of India vs Indian National Shipping Owners Association 2010 (17) STR J57 (SC). The Board had also issued instructions on 26 September, 2011. Taking into consideration all the aforesaid facts, a Division Bench of the Tribunal in N.R. Management Consultants India (P) Ltd. vs Commissioner of Service Tax, New Delhi A.No. ST/53360 53904/2014 decided on 08 December, 2017 held that there would be no justification in invoking the extended period of limitation in such a situation and the relevant portion of the decision is reproduced below : 11 Even otherwise, we note that the demand for extended period cannot be sustained in the facts and circumstances of the present case. Admittedly, the concept of reverse charge was a new legal principle for service tax. The same was subjected to numerous litigation and interpretation. The legal position got firmed up only after the decision of Hon ble Bombay High Court in Indian national Shipping Owners Association 2009 (13) STR 235 Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss at all the justification for issuing demand for extended period. Admittedly, we find that the issue relating to service tax liability on the recipient of service was a subject matter of large number of litigations. The concept of reverse charge on import of service was new and was disputed. The legal position got clarified only with the decision of Hon ble Bombay High Court in the case of Indian National Shipowners Association (supra). In such situation, we find that there is no justification for invoking allegation of willful mis-statement, suppression of fact with intend to evade service tax etc. Accordingly, we hold that the demand is barred by limitation, as having been issued well beyond the normal period from the relevant date. Accordingly, the impugned order is set aside on the ground of limitation and the appeal is allowed. 72. Thus, the imposition of penalty under the impugned order under this head is not justified. SERIAL NO. 3 ADVERTISING AGENCY SERVICES --- ADVERTISING AGENCY SERVICE 73. The relevant portion of the order of the Commissioner under this head is contained in paragraph 26.2 of the order and is as follows : 26.2 On perusal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to levy of Service Tax under the category of business auxiliary services . These charges are received from the hotel guests for conversion of currency and service is rendered by the Appellant independently and not on behalf of anybody or in the capacity of an agent. The Appellant also does not even know the purpose for which such conversion is required by the customer. These charges, thus, cannot be said to be towards business auxiliary services and thus the contention is that confirmation of demand in the impugned order is not justified. The learned Counsel also submitted that the impugned order also does not justify as to how much charges are towards any of the activities specified in definition of business auxiliary services under Section 65(19) of the Act. In this connection, learned Counsel placed reliance on the following decisions of the Tribunal : (i) Marudhara Motors vs Commissioner of Central Excise, Jaipur-II Final Order No. ST/58225/2017 dated 01.12.2017 (ii) Molight Shipping Services Limited vs Commissioner of Central Excise, Chennai 2017-VIL-929-CESTAT-CHE-ST (iii) CMA CGM Global (India) Private Limited vs Commissioner of Central Excise, Chennai 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, photocopier, fax etc. are all ancillary to the Convention, services being provided by the party and are liable to be included in the gross value for the purpose of payment of service tax in terms of Section 67 of the Act. Thus the issue before me for deciding is as to whether the other services viz. Secretarial service, photocopier, fax etc. are all ancillary to the Convention services or not and whether the same is taxable under Section 65(105)(ze) of the Finance Act, 1994 for the purpose of levy of Service Tax. xxxxx xxxxx xxxxxx In view of the CBEC Circular, I find that the additional amount of ₹ 90,01,132/- charged by the party for providing facilities by way of other services viz. Secretarial service, photocopier, fax etc. are also liable to be included in the value of taxable service and the involved amount of Service Tax to the tune of ₹ 5,95,354/- (inclusive of Education Cess) is liable to be demanded and recovered from the party under the proviso to Section 73(1) under the Convention Service. 83. The impugned order has confirmed the demand of Service Tax on the income from Business Centre on the ground that it is part and parcel of convention ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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