TMI Blog2023 (12) TMI 1006X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax of this amount - service tax in case of supply of food etc. in restaurant is being charged on abatement basis on the amount collected by the provider of restaurant service from the recipients thereof the TRU Circular No.334/3/2011 dated 28.02.2011 has also been referred, wherein it has been held that separation of certain portion of the bill as service charge will not represent the full value of all services rendered by the restaurants - there are no infirmity in those findings in the order under challenge when the demand of Rs.1,73,211/- on service charges has been confirmed by the Commissioner (Appeals). This issue is decided confirming appellant liability to pay service tax on service charges collected besides the price of food. Whether the amount of no show charges‟ i.e. the amount forfeited advance as was received for providing accommodation service, is the consideration for providing the declared service by the appellants? - HELD THAT:- In the present case admittedly there is no separate fee or charges recovered by the appellant from the customers/ recipients of hotel accommodation service, for not being appearing to attend the said service. There was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collecting service charge from the customers besides the price of the food, however, they were not paying service tax on those service charges. 2) That the appellants were forfeiting the charges in cases where the customers do not turn out or cancelled the reservations already made by them. The said activity of the appellants is alleged to be a declared service as the act amounts to agreeing to tolerate an act or a situation. Receiving no proper response from the appellants that a Show Cause Notice No.829 dated 18.04.2016 was served upon the appellants proposing the recovery of service tax amounting to Rs.17,103/- on the service charges of Rs.7,18,331/- collected by them i.e. in the former case and a demand of Rs. 1,35,709/- on the amount of Rs.10,97,974/- collected in the name of no show charges by them i.e. in the latter case. The proportionate interest and the appropriate penalties were also proposed vide the said Show Cause Notice. The proposal was initially confirmed vide the Order-in-Original No.87/2017 dated 31.03.2017. The appeal against the said order has been rejected vide the order under challenge. Being aggrieved the appellant is before this Tribunal. 2. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as 1989 (40) ELT 276 (SC). With these submissions the imposition of penalty is also prayed to be set aside. The order as such is prayed to be set aside and appeal is prayed to be allowed. 6. While rebutting these submissions, learned Departmental Representative has mentioned that the appellants were charging the amount from their customers with all intention to not to pay service tax on the impugned restaurant services. It was an intentional act of the appellants to not to pay the service. Hence there is sufficient suppression of facts and malafide intent on part of the appellants. The extended period has rightly been invoked. Appellants were otherwise not including details of impugned services in the returns. Nor they were paying service tax in respect of the declared services vis- -vis no show charges‟. Impressing upon the findings in the order under challenge the appeal in hand is prayed to be dismissed. 7. Ld. Departmental Representative has relied upon the decision of this Tribunal in the case of Hotel Mela Plaza vs. Commissioner of Central Excise, Ghaziabad reported as 2006 (3) STR 563 (Tri.-Del.). 8. Having hearing the rival contentions and perusing the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncludes - xx xx xx (b) xx xx xx (c) xx xx xx Section 68 provides that every person providing taxable service to any person shall pay service tax at the rate specified in Section 66B in such manner and within such period as may be prescribed. 10. The bare perusal of these provisions makes it clear that where service charge is chargeable on any taxable service with reference to its value there has to be a consideration either in the form of money or wholly or partly consisting of money or where it is not ascertainable in money. Term consideration is defined under section 2 (d) of Indian Contract Act, 1872 which reads as follows:- 2(d) When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise. 11. Hon ble Apex Court in the case of Commissioner of Service Tax vs. M/s. Bhayana Builders reported as 2018 (2) TMI 1325 has held that consideration must flow from the service recipient to the service provider and should accrue to be benefit of the servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a consideration for rendering declared service. Declared service is defined under Section 66 E (e) as the service which is agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act. There has, therefore, to be a flow of consideration from one person to another when one person agrees to the obligation to refrain from an act, or to tolerate an act, or a situation, or to do an act. In other words, the agreement should not only specify the activity to be carried out by a person for another person but should specify the : (i) consideration for agreeing to the obligation to refrain from an act; or (ii) consideration for agreeing to tolerate an act or a situation; or (iii) consideration to do an act. Thus, a service conceived in an agreement where one person, for a consideration, agrees to an obligation to refrain from an act, would be a declared service‟ under section 66E(e) read with section 65B(44) and would be taxable under section 68 at the rate specified in section 66B. Likewise, there can be services conceived in agreements in relation to the other two activities referred to in section 66E(e). 14. It is trite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 E (e) has already been dealt with by this Tribunal in the case of Lemon Tree Hotel (supra), South Eastern Coalfields Ltd. (supra) the Tribunal has held that the retention of amount on cancellation would not attract service tax under 66E (e). The relevant portion of the decision reads as follows:- So far as the first issue is concerned, the appellant, in the course of their business of running a hotel, offers advance booking to its customers, on payment of rent or deposit. Sometimes in the event of cancellation or of no show i.e. if the guest does not come for stay, the appellants retain the full or part of the amount towards cancellation charges. It is admitted that the appellant have paid service tax under Accommodation Services as and when they receive advance, availing the permissible abated value. It is the case of the Revenue that upon cancellation by the customers, the gross amount received by the appellant qualifies the receipt under Section 66E(e). Ld. Commissioner (Appeals) in confirming the demand under this head has observed that retention of such cancellation charges is not against the provisions of intended services but for not availing the said services by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of facts also cannot be alleged against appellants in the given circumstances. 19. The demand in question pertains to the period from July, 2012 to September, 2015 and the Show Cause Notice is of April 2016. Resultantly the major demand i.e. from July, 2012 to March, 2015 is the demand for the extended period. And that extended period should not have been invoked by the Department in view of the above observations. We draw our support from the decision in the case of Chemphar Drugs Liniments (Supra). Since the issue is observed to be an interpretational, imposition of penalty is also not warranted in the given circumstances. We draw our support from the decision in the case of Commissioner of Central Excise and Service Tax, Mumbai vs. Reliance Industries Ltd. reported as 2016 (45) STR 341. In the light of this discussion this issue also stands decided in favour of the appellant. 20. As a result of findings on three of the issues framed here above, except for the miniscule demand for the period w.e.f. April 2015 to September 2015 i.e. for the normal period, that too, on the amount of service charges collected, the entire demand is hereby set aside. Appeal stands, accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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