Case Law Details

Case Name : M/s Paradise Mehak Properties Pvt Ltd Vs Commissioner of Centra
Appeal Number : Excise, JAIPUR-I (CESTAT Delhi)
Date of Judgement/Order : Order No. - ST/S/446/2012-CUS
Related Assessment Year : 13/04/2012
Courts : All CESTAT (1012) CESTAT Delhi (324)

Appellant has rented out / leased the land along with the entire building, swimming pool and restaurant, bar, parking etc. with all the facilities as provided in the base building and the amenities and facilities under an agreement on monthly rental basis and a hotel is being run in the said building by M/s. Royal Orchid Banjara Pvt. Ltd. – in view of Explanation-1, clause (d) to the entry in section 65(105)(zzzz), it cannot be said to renting of immovable property.

DELHI CESTAT

M/s PARADISE MEHAK PROPERTIES PVT LTD

Versus

COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I

No. – 1618 of 2011

Order No. – ST/S/446/2012-CUS

Dated – April 13, 2012

ORDER

Per: Archana Wadhwa:

Service Tax of Rs. 19,50,612/- stands confirmed against the applicant for the period June, 2007 to June, 2008 on the ground that they have rendered the taxable service of renting of immovable property to Royal Orchid Banjara Pvt. Ltd. and as such are required to pay the Service Tax.

2. The appellant took a categorical stand before the lower authorities that in terms of definition of immovable property, the same does not include building used solely for residential purposes and building used for the purpose of accommodation including hotels, hostels, boarding houses, holidays accommodation, tents, camping facility etc.

3. While dealing with the above submission of the advocate Commissioner (Appeals) has observed as under:

“24…….The appellant had contested that hotels are exempted from payment of tax under the said category, I find that the appellant has rented out / lease of the land along with the entire building, swimming pool and restaurant, bar, parking etc. with all the facilities as provided in the base building and the amentias and facilities under an agreement on monthly rental basis and a hotel is being run in the said building by M/s. Royal Orchid Banjara Pvt. Ltd. The said building is admittedly not for accommodation purpose of the lessee. The building provided by the appellant is being used by M/s. Royal Orchid Banjara Pvt. Ltd. to run the hotel business which is commercial in nature. The building premises provided by the appellant on rental basis, is not used as residence by the lessee himself. The exemption under the explanation 1 (d) of the Section 65 (105) (zzzz) of the Finance Act, 1994, is available to the hotels, hostels etc. who provides rooms on rent to their clients and not in respect of immovable property which is rented out to run the hotel business which is without any doubt a commercial activity and is not governed by the exclusion clause (d) of the Explanation-1 to Section 65 (105) (zzzz) of the Act.”

4. In this regard we find that commissioner(A) held in above para that the exemption is available to the hotels, hostels etc. who provides rooms on rent to their clients and not in respect of immovable property (building) which is rented out by a person to another person to run the hotel business, therefore, the argument advanced by the appellant has no force.

5. We do not find any force in the above reasoning adopted by the Commissioner (Appeals). The explanation-I to the entry is to the clear effect that for the purpose of said clause, immovable property does not include the following:

“(d) building used solely for residential purposes and buildings used for the purpose of accommodation including hotels, hostels, boarding houses, holiday accommodations, tents, camping facilities.”

6. In view of the above, we are of the opinion that the appellant had good prima facie case in its favour so as to allow the stay petition unconditionally.

(Pronounced in the open court)

NF

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