9911796707
TMI Blog2025 (3) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal dated 14.09.2018 passed by the Additional Commissioner and set aside the demand of service tax with penalty on the cancellation charges and cost recovered towards providing food to its own employees. 2. The facts which led to the issue of impugned order are that the respondents are engaged in providing hospitality services and were registered with the service tax department. Sometimes, the guests who paid advances for stay either do not turn up or cancel the booking or occupy the room for a shorter period and in such cases, the Respondent deducted some amounts as cancellation charges towards the administrative expenses. This amount, according to the Revenue, was exigible to service tax as the amount received for tolerating an act un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of cancellation charges :- (a) The activity of cancellation of room bookings and the consideration collected by the party for the same in the form of 'Room Retention Charges' cannot be covered under the category of 'Short Accommodation Services'. Once the guests/clients have cancelled their bookings and do not turn up to occupy the rooms, and then there is no question of accommodation services being rendered to the guests /clients. Since, no accommodation services are being rendered by the party so it is clear that they cannot get the benefit of the abatement which is available only for the short term accommodation service. Thus, any room retention charged collected by the party are liable to Service Tax at the normal rate i.e. wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to pay service tax on the consideration amount received from the employees. (ii) Since, the employees are being served food in the hotel of the Party and some charges were being collected for the same, therefore, this is evidence in itself that services were being provided for a consideration and hence Service Tax was required to be paid for the same. (iii) Any activity involving preparation of food and its serving to the employees automatically has the service part built into it. It is not possible to remove the service element from this activity as a lot of human services are involved in the entire process of cooking, preparation and serving of meals to people. Thus, the claim of the assessee that the discounted value for emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a situation. It does not cover those cases where any amount is charged for breach of contract as a compensation. Therefore, no service tax can be levied on them. Reliance is placed on the order of this Tribunal in Shiv Vilas Resorts (P) Ltd. versus The Commissioner of Central GST and Central Excise, Jaipur in Service Tax Appeal No. 51685 of 2018 passed by this Tribunal ; (vi) the amounts recovered towards the cost of food provided to the employees of the respondent cannot be treated as consideration for rendering a restaurant service ; (vii) The food served in the canteen/cafeteria of the hotel is at par with the food served in the canteen of the factory and, therefore, is exempted by Sl. No. 19A of Notification No. 22/2012-ST. (viii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n amount is retained by the respondent and the rest is refunded. These amounts which are retained are the point of dispute. According to the Respondent such amounts are not exigible to service tax because there is no agreement to cancel the reservation nor is any amount paid for the purpose. The Respondent keeps the rooms on those days for use of the person who booked the room. Thereafter, if the client cancels the room, respondent would suffer a loss because it is difficult to get a new client for the day. In order to discourage cancellations, they deduct an amount of advance and only refund the rest. 13. For something to fall within the mischief of Section 66E (e) of the Finance Act, one has to agree to tolerate an act and in lieu of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from other side. However, we are dealing with a situation where there is no agreement to renege from a contract between the respondent and its guests. Therefore, there was no consideration. The amounts which were paid to the respondent were in the form of damages/compensation. 17. In view of the above, we find that no service tax can be charged on the retention charges received by the respondent. Amounts collected from the workers and employees :- 18. Labour laws require the respondent to provide subsidized food to its employees and workers. The respondent made an arrangement to cook food and supply it through its own canteen to its employees. It must be noted that the canteen for its employees was different from the restaurant in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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