ST - Revenue cannot raise same issue again which has attained finality intra-parties: CESTAT
By TIOL News Service
MUMBAI, MAY 16, 2017: THE appellant is providing rooms to corporate clients for holding conferences, meetings, etc. It is the case of Revenue that appellant should have discharged service tax liability under the category of 'Mandap Keeper Service'.
The SCN was contested by the appellanton the ground that they are only charging room rent and were not charging separately for the conference room and hence they are not covered under 'Mandap Keeper Service'.
The lower authorities upheld the demand and the Tribunal too rejected the appeals. See - 2014-TIOL-1210-CESTAT-MUM .
| ST - Mandap Keeper Service - Valuation - Appellant providing rooms on rent to service receiver who booked Conference/Banquet Hall - details about the number of rooms provided, whether the same were provided on complimentary basis or whether rent was being collected is not forthcoming - appellant also not producing any evidence in the matter - in these circumstances, addition of room rent in value of service provided as Mandap Keeper is proper - demand upheld & appeals dismissed: CESTAT [para 5, 6] |
However, the Bombay High Court set aside the CESTAT order and remanded the matter. See - 2015-TIOL-2415-HC-MUM-ST .
| ST - Appellant providing rooms to clients who booked Conference Hall - addition of room rent in value of service provided as Mandap Keeper - Appeal has been dismissed only on technical ground of non-production of the requisite certificate or proof of room rent being charged and bills raised in that behalf - Tribunal should have granted opportunity to produce evidence - Tribunal has adequate powers to render justice or to prevent miscarriage of justice - order quashed and matter remanded: High Court [para 9] |
Accordingly, the appeal was heard by the Bench recently.
The appellant submitted -
+ On the very set of facts, for the earlier period issue was resolved between the appellant and the department by an adjudication order dated 28/04/2004, wherein the appellant presented before the adjudicating authority all the details and after scrutinizing the said details the adjudicating authority came to a conclusion that approximately 20% of the total income from room rent can be attributed towards conference hall and service tax can be levied on such amount after granting eligible abatement on the said amount calculated @20% of the total income.
+ Despite contesting the issue, in order to settle the issue once and for all, appellant started paying amount of service tax liability on such 20% of the total income after claiming abatement as per order-in-original dated28/04/2004 (and which order apparently has been accepted by Revenue).
+ Once luxury tax on room rent and VAT are paid on sale of food, the services rendered is certainly not 'Mandap Keeper Service' and this law is settled by the Tribunal in the case of Merwara Estates - 2009-TIOL-871-CESTAT-DEL and Rambagh Palace Hotels Pvt Ltd - 2012-TIOL-673-CESTAT-DEL .
+ In the absence of any machinery to ascertain the value of the taxable service in composite sale price, Revenue is not justified to artificially or arbitrarily attribute any part of the consideration towards taxable service is the law settled by Delhi High Court in the case of Suresh Kumar Bansal - 2016-TIOL-1077-HC-DEL-ST.
The AR reiterated the findings of the lower authorities.
The appellant observed -
++ We find that the invoices are specifically in the name of corporate clients and the invoices indicate only the amounts charged by them for the rooms. The details of the rooms and check-in and check-out done by the officials of their corporate clients are clearly indicating that the appellants are only charging room rent to their corporate clients. There is nothing in the said invoices to indicate that appellant had charged any amount towards utilization of conference halls and gymnasiums, etc. There is no bifurcation indicated in the invoices to come to a conclusion that appellant had in fact charged an amount for the use of the conference halls.
++ In our considered view, the stand taken by the appellant, that having discharged luxury tax on the room rent charged to the corporate clients they are not required to pay any service tax, can be a bona fide belief and is acceptable on the face of it; that appellant had discharged luxury tax and the VAT returns filed by the appellant also indicate that they had paid luxury tax on room charges and the assessment orders of VAT authorities also indicate the same.
The Bench held that both the lower authorities were in error in coming to a conclusion that the appellant needs to be taxed under 'Mandap Keeper Service' for the entire amount of the room rent collected by them.
In the matter of the reliance placed on the order-in-original dated 28/04/2004 passed in their case, the CESTAT noted that Revenue could not raise the same issue again which has attained finality intra-parties.
The impugned orders were set aside and the appeals were allowed.
(See 2017-TIOL-1624-CESTAT-MUM)
