TMI Blog2023 (12) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... aurant does not come under the ambit of Restaurant Services . The basic premise of the Show Cause Notice for demanding Service Tax from the appellant is that the services from the restaurant are located within the premises of the hotel and the hotel has a licence to serve liquor, hence, the restaurant fulfills the requirements under the category of Restaurant Services is not legally correct and this inconsistent interpretation has to be discarded. The term establishment as figuring in the definition under Section 65(105)(zzzzv) has been referred to as the Hotel in whose premises the restaurant is located and not for the Restaurant . As such, the restaurants located in the appellant s premises both at Trichy and Thanjavur have not satisfied one of the conditions of serving alcoholic beverages and so the Service Tax liability cannot be fastened in respect of restaurant service on the appellant. As held by the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS M/S RATAN MELTING WIRE INDUSTRIES [ 2008 (10) TMI 5 - SUPREME COURT] , the Department Circulars and instructions are binding on the Revenue authorities under the respective statutes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rages or both, in their premises. 2.2 Therefore a Show Cause Notice bearing No. 06/2013-ST dated 03.06.2013 was issued to the Respondent proposing to demand Service Tax of Rs.73,80,436/- on Restaurant Services for the period from 01.05.2011 to 31.12.2012 invoking proviso to Section 73(1) of the Finance Act, 1994, besides proposing to levy interest under Section 75 and penalties under Sections 76, 77(1)(a), 77(2) and 78 of the Finance Act, 1994. 2.3 After due process of law, the adjudicating authority vide Order-in-Original No. 06/2014-ST dated 20.02.2014 dropped further proceedings initiated under the Show Cause Notice, on the ground that the essential conditions stipulated under Section 65(105)(zzzzv) of the Finance Act, 1994 have not been met and they became eligible for exemption under Sl.No. 19 of Notification No. 25/2012-ST dated 20.06.2012. 3. Aggrieved by the above Order, the Department has filed this appeal before this forum. 4.1 It is expedient to examine the legal provisions relevant to this appeal. The Respondent was found to be providing Restaurant Service w.e.f. from 01.05.2011. The levy of Service Tax on 'Restaurant Service came into effect from 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by a restaurant in relation to serving food or beverage in its premises does not figure in the negative list under Section 66D. 4.5.1 Section 65B(44) of the Act defines 'service' as follows :- service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include - (a) an activity which constitutes merely, - (i) a transfer of title in goods (ii) such transfer, delivery or supply of any goods which is (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer........ (c) fees taken in any Court or 4.5.2 Thus, as per the above definition, service includes a declared service. As per Section 65B(22), declared service means any activity carried out by a person for another person for consideration and declared as such under Section 66E. Section 66E specifies nine activities, listed under clauses (a) to (i) of the Section, as constituting declared services. Clause (1) of Section 66E specifies the following activity as constituting a declared service: Section 66(E)(1): Service portion in an activity whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances:- Period Circumstances From 01.05.2011 to 30.06.2012 If a restaurant, by whatever name called, having air-conditioning in any part at any time of the financial year and having licence to serve alcoholic beverages, provides any service in relation to serving food or beverage in its premises.- Section 65(105)(zzzzv) Value: 30% of the gross amount charged, i.e., after allowing abatement of 70% under Notification No. 1/2006- ST dated 01.03.2006 as amended by Notification No. 34/2011-S.T. dated 25.04.2011. From 01.07.2012 to 31.03.2013 Declared service' covers service portion in an activity wherein food or any other article of human consumption or any drink is supplied as part of the activity.- Section 66E(i). Exemption from tax, granted under Notification No. 25/2012-ST (Sl. No.19), is inapplicable to services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess having (1) the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year, and (ii) a licenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the circular ibid was with reference to two restaurants situated in a complex. The above view was supported by the clarification at Sl.No. 2 of the Circular wherein it was clarified that the food and beverages served at swimming pool or an open area are also liable for payment of Service Tax as the above areas become extensions of the restaurant. 5.2 It was further submitted that the respondent has satisfied both conditions namely having air-conditioning facility and licence to serve liquor in their premises and hence the service rendered by the Respondent was liable for payment of Service Tax. It was contended that no where it was contemplated in the definition of Section 65(105)(zzzzv) that serving of food or beverages including alcoholic beverages or both should take place in the restaurant itself. And it was sufficient if the serving took place in the premises of the restaurant, which includes bar, swimming pool or an open area attached to the restaurant as clarified in the Circular cited above. 5.3 It was contended that the Tamil Nadu Liquor (Licence) and Permit Rules prohibiting serving of food in the bar was not applicable in this case as the financials of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir hotel is against the concept of law. He has referred to the expression the establishment used in the definition of Section 65(105(zzzv)) of the Finance Act, 1994 is intended to qualify the term restaurant and not the hotel establishment as such. The harmonious reading of the complete definition would give the meaning that the restaurant having the air conditioning facility with licence to serve liquor is liable to Service Tax and not the restaurant located in the hotel establishment, which has got a permit room in a separate area distinct from the restaurant. It was further averred that the permit rooms are not liable to Service Tax, even if food and beverages are served there as they are not restaurants attracting Service Tax levy. 7. We have considered the submissions advanced by the Ld. Authorised Representative and the Ld. Advocate and carefully considered the submissions and evidences on record. 8. The main issues that arise for consideration in this appeal are :- i. Whether the activity rendered by the Respondent qualifies for demand of Service Tax under Restaurant Service in terms of provisions of Section 65(105)(zzzzv) of the Finance Act, 1994, up til ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplex, out of which only one or more satisfy both the criteria relating to air- conditioning and licence to serve liquor, will the other restaurant(s) be also liable to pay Service Tax? Service Tax is leviable on the service provide by a restaurant which satisfies two conditions: (i) it should have the facility of air conditioning in any part of the establishment and (ii) it should have license to serve alcoholic beverages. Within the same entity, if there are more than one restaurant, which are clearly demarcated and separately named, the ones which satisfy both the criteria is only liable to service tax. 2. .. 3. . .. From the above clarification, it is clear that Service Tax is liable on the Restaurant Service if two essential conditions are required to be fulfilled viz., if it has the facility of air-conditioning in any part of the establishment and it should have licence to serve alcoholic beverages. 11.1 In terms of the Notification No. 12/2012-ST dated 17.03.2012 the Union of India exempted various taxable serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion, Trichy vide C.No. IV/06/231/2012-HAE dated 07.02.2014, it is seen that:- i. In respect of Hotel Sangam, Trichy, there are two restaurants i.e. one 24 Hour Coffee House and another restaurant and one liquor bar. The liquor bar (Soma Bar) and the two Restaurants (24 Hour Coffee Shop and Chembian Restaurant) are located in the same Hotel premises. The site map of the Hotel Premises clearly shows that the restaurant is clearly demarcated and has no connection what-so-ever with the liquor bar. ii. In respect of Hotel Sangam, Thanjavur, both liquor bar and the Restaurant (Cascade Restaurant) are located in the same Hotel premises. But the liquor bar is not part of the Restaurant situated in the Hotel. The liquor bar and Restaurant are located at different sides/locations of the Hotel premises. The Hotel has the facility of Centralised AC. The site map of the hotel premises also shows that the Restaurant is clearly demarcated from the liquor bar. iii. On perusal of the FL-3 licence issued in respect of both the above said Hotels clearly shows that permission has been given to serve liquor only in the permit room and as such, the restaurants have no licence to serve liquor. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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