The Delhi bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that infrastructural support services do not include Guest House Facility, and cannot be treated as provision of Business Support Services (BSS).
The appellant, M/s. Anand Automotive Ltd. owns guest houses at various places and allows them to be used by employees of group companies while on official tours. For such use, the appellant charges its group companies and issues debit notes. Some portions of guest houses are also used for the residence of employees of the appellant, in addition to those of its group companies. The appellant recovers electricity and maintenance charges from such employees, which also form part of transit house income in the books of accounts and according to the appellant, it is not susceptible to service tax as the same would be service to self. The appellant contends that these submissions, corroborated by relevant invoices, were made before the Commissioner in reply to the show-cause notice, but there is no advertisement to this reply and the demand has been confirmed without any reasoning.
The appellant submitted that the provision of housing facilities on a short-term basis is specifically covered under the scope of ‘short-term accommodation services’ as defined in section 65(105)(zzzzw) of the Finance Act and this service became taxable only from May 01, 2011. The appellant has, accordingly, been paying service tax under the said category from May 01, 2011, onwards. Since the subject activities of the appellant have been made taxable only from May 01, 2011, under section 65(105)(zzzzw) of the Finance Act, the appellant cannot be charged service tax under any other category (such as BSS), prior to this date.
The two-member bench of President Justice Dilip Gupta and Technical Member P.V. Subba Rao noted that the provision of housing facility on a short-term basis is specifically covered under “short-term accommodation services”, which has been subjected to service tax w.e.f. May 01, 2011, under section 65(105) (zzzzw) of the Finance Act. As this service is a new entry and has not been carved out from any other existing service, it cannot be included under any other category, including BSS, prior to May 01, 2011.
Therefore, the CESTAT ruled that infrastructural support services include only the service specified in the Explanation, which essentially includes setting up office spaces. Thus, accommodation or guest house facilities will not form part of infrastructural support services and cannot be treated as a provision of BSS.
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