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TMI Blog2024 (9) TMI 1496X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited (formerly "Joy Hotel and Resort Private Limited") [Joy Hotel] and Sushil Suri, Chief Executive Officer of Blue Coast Group of Companies. 2. Service Tax Appeal No. 52629 of 2016 has been filed by Blue Coast to assail that part of the order dated 20.06.2016 passed by the adjudicating authority that confirms the demand of service tax amounting to Rs. 2,46,28,114/-; appropriates an amount of Rs. 1,04,28,894/- paid by Blue Coast during investigation; confirms the demand of interest under section 75 of the Finance Act 1994 [the Finance Act]; and imposes penalties under sections 77 and 78 of the Finance Act. 3. Service Tax Appeal No. 52628 of 2016 has been filed by the Sushil Suri, Chief Executive Officer of Blue Coast to assail that part of the order dated 20.06.2016 passed by the adjudicating authority that imposes a penalty of Rs. 1,00,000/- upon him under section 78A of the Finance Act. 4. Service Tax Appeal No. 52630 of 2016 has been filed by Silver Resort to assail that part of the order dated 20.06.2016 passed by the adjudicating authority that confirms the demand of service tax amounting to Rs. 2,46,28,114/-; appropriates an amount of Rs. 3,20,22,251/- paid by Silver R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said arrangements are depicted in the following chart: SECOND PART 12. Joy Hotel was granted leasehold rights under the lease deed dated 15.02.1982 for a period of 99 years by the Chandigarh Administration for the purpose of construction of a five-star hotel on commercial/retail space. 13. Blue Coast entered into an agreement with Joy Hotel on 10.04.2010 whereby Joy Hotel granted lease of the Plaza to Blue Coast for a payment of Rs. 6,50,00,000/-. Blue Coast was also authorized to sub-lease or assign or transfer rights of the units in the Plaza. 14. Blue Coast also entered into a tripartite agreement with Joy Hotel and the unit holders, under which the unit holders were granted leasehold rights of the commercial units for the purpose of undertaking permitted commercial activities, subject to payment of a lump-sum consideration. 15. These arrangements are depicted in the following chart: FACTS 16. An investigation was conducted by the Officers of the Directorate General of Goods and Service Tax Intelligence. This culminated into issuance of a show cause notice dated 22.09.2014 proposing a demand of service tax amounting to Rs. 27,67,92,047/- with interest and penalties. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitration proceedings between DIAL and Silver Resort and it was held to be valid by the Arbitral Award dated 27.06.2017 and by the Delhi High Court in the order dated 08.05.2018; (iii) The advance amount paid by the unit holders in terms of the tripartite agreement was also refunded by Silver Resort/Blue Coast in terms of either the Settlement Agreement entered between the parties or the Scheme of Disbursement framed by the Delhi High Court in the order dated 11.10.2018; (iv) The initial tripartite agreement between the Silver Resort, Blue Coast and the unit holders has been repudiated and the amount received thereunder has been or is being paid back to the unit holders. There is, therefore, no provision of any service by Silver Resort to the unit holders. In support of this contention, reliance has been placed on the following decisions: (a) Vaiguinim Valley Resort Unit of Britto Amusements Pvt. Ltd. vs. CGST, Goa [2022 (12) TMI 722- Bombay High Court]; (b) Honda Cars India Ltd. vs. CCE & ST [New Delhi, 2021 (48) GSTL 247 (Tri.-Delhi)]; and (c) Amit Metaliks Limited vs. Commissioner of CGST, Bolpur [2020 (41) GSTL 325 (Tri.- Kolkata)] (v) In terms of the lease deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this JDA, Blue Coast identified interested unit holders and a tripartite agreement was entered between Silver Resort, Blue Coast and the unit holders for grant of leasehold rights to the unit holders of the commercial units. Blue Coast was entitled to receive consideration from the customers in terms of the tripartite agreement, a part of which was shared with Silver Resort in terms of the JDA. It is on such amount received by Silver Resort that the impugned order has confirmed the demand of service tax by holding that Silver Resort provided "renting of immovable property service" to the unit holders. 23. It is seen that the Development Agreement between the DIAL and Silver Resort was terminated due to breach of the terms of the Agreement by Silver Resort, as is evident from the termination notice dated 16.07.2015 sent by DIAL to the Silver Resort. The said termination notice is reproduced: "Silver Resort Hotel India Private Limited, 263C, Arossim Beach, Cansaulim, Goa-407712 Also at Silver Resort Hotel India Private Limited, 415-417. Antriksh Bhawan, 22 K.G. Marg, New Delhi-110001 Kind Attention: Mr. Sushil Suri Subject: Termination Notice, issued under A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d shall have the meaning ascribed to them in the Project Agreements Regards, For Delhi International Airport (P) L.td." 24. It needs to be noted that DIAL took possession of the Asset Area-3 after the termination notice dated 16.07.2015. The said termination was challenged in arbitration proceedings between DIAL and Silver Resort and it was held to be valid by the Arbitral Award dated 27.06.2017. The Delhi High Court, in the order dated 08.05.2018, also held it to be valid. The advance amount paid by the unit holders in terms of the tripartite agreement was also refunded by Silver Resort/Blue Coast in terms of either the Settlement Agreement entered between the parties or under the Scheme of Disbursement laid down by the Delhi High Court in the order dated 11.10.2018. 25. As the agreement with DIAL was terminated, subsequent agreements such as JDA and tripartite agreements with the unit holders also stand repudiated. Thus, the question of rendition of any service thereunder by Silver Resort does not arise. The confirmation of demand in the impugned order is, therefore, liable to be set aside. 26. What is also important to note is that the charge of service tax under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Hotel and the Blue Coast, and the agreement between the Joy Hotel, Blue Coast and the unit holders, it would be clear that Joy Hotel rendered "renting of immovable property service" to Blue Coast and Blue Coast rendered "renting of immovable property service" to the unit holders. Thus, the impugned order holds that both these services would be taxable. 33. Under the lease deed executed between Joy Hotel and the Chandigarh Administration, Joy Hotel was granted leasehold rights for a period of 99 years for the construction of a five-star hotel along with a plaza on the commercial space. Joy Hotel, in turn, entered into an agreement with Blue Coast for grant of leasehold rights in exchange of a consideration of Rs. 6,50,00,000/-. In terms of this agreement, Blue Coast identified interested unit holders and a tripartite agreement was entered between Joy Hotel, Blue Coast and the unit holders for the grant of leasehold rights to the unit holders with respect to the commercial units for a consideration. It is on such amount of Rs. 6,50,00,000/- received by Joy Hotel and the consideration received by Blue Coast from the unit holders that the impugned order has confirmed the demand of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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