Monday, June 30, 2014

Room rent and food/beverage charges aren’t includible in value of convention services, if they are raised separately

Bills of room rent, food and beverages raised separately in a convention service cannot be included in value of convention service.


a)The assessee, a provider of convention services, was paying service tax under that category. Participants of such convention normally book rooms for lodging purpose.

b)The department was of the view that room rent and charges for food provided to participants were required to be included in value of convention services.

c)Since the assessee did not pay tax on such charges, revenue initiated proceedings for recovery of tax short paid and confirmed demand.

On appeal, the CESTAT held in favour of assessee as under:

1)In case of Ram Bagh Palace Hotels (P.) Ltd. v. CCE [Final Order No. ST/A/18/1012-Cus, dated 21-12-2011], it was held that renting of hotel rooms could not be held to be covered by the definition of ' Mandap Keeper' as the hotel had an identity, personality and function quite distinguishable from that of a Mandap.

2)It was also held that definition of Mandap Keeper nowhere covers the temporary occupation of hotel rooms for the purpose of boarding and temporary residence. Since bills of room rent, food and beverages were raised separately, they could not be held to be a part of value of convention service.

3)Thus, the case decided (Supra) on issue of Mandap Keeper’s Service was equally applicable to convention service. Hence, if bills were raised separately against room rent and food supply charges then they could not be included in value of convention service. - CHOKHIDHANI RESORTS (P.) LTD. V. CCE [2014] 46 20 (New Delhi – CESTAT)