Case Law Details
CA Urvashi Porwal
Brief of the Case
In the case of The Lake Palace Hotel and Motels P Ltd. vs. Commissioner of Central Excise Jaipur, it was held that service tax is not payable on the notional interest accrued on the security deposit received on providing immovable property on rent.
Facts of the Case
The facts of the case are that the appellant is owner of land and building which has been rented out by them to M/s. Indian Hotels Company Ltd. for renting the hotel and the said building on profit sharing basis. The appellant also received the security deposit of Rs.20 crores. Revenue is of the view that appellant has leased out the building i.e. immovable property to M/s. Indian Hotels Company Ltd.. Therefore, they qualify to pay service tax under the category of renting of immovable property service. It was also proposed that as appellant has received a security deposit of Rs.20 crores, therefore, the notional interest on the security deposit, appellant is liable to pay the service tax. In these set of facts, a show cause notice was issued to the appellant for the period 2010-2011 and 2011-2012 to demand service tax as discussed above. The matter was adjudicated, demand of service tax was confirmed along with interest and various penalties were imposed. Aggrieved from the said order, appellant was before Tribunal.
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