since sec.65(105)zzzz is not applicable to buildings used for the purpose of accommodations,inluding hotels,hostels,and boarding houses. Whether the bar&restaurant is required to pay service tax on immovable property used by it.
venkat (employee) (43 Points)
07 October 2009since sec.65(105)zzzz is not applicable to buildings used for the purpose of accommodations,inluding hotels,hostels,and boarding houses. Whether the bar&restaurant is required to pay service tax on immovable property used by it.
Gautam Joshi
(Partner)
(361 Points)
Replied 07 October 2009
Hi Venkat,
Really a good question. What we need to understand is a difference between hotels,hostels,boarding houses and bars and restaurants.
If I can explain in this regard, bars and restaurants are not established for the purpose of letting a place to stay while hotels, hostels and boarding houses are surely for the purpose of place let out. Their basic service is to let out a place for stay and than they give additional service of restaurant, gym, swimming pool etc.
If we interpret the definition of "Immovable Property" given in Explanation beneath Section 65(105)(zzzz) of Finance Act, 1994 then surely and undoubtedly bars and restaurants are liable to pay Service Tax on Renting of Immovable Property.
Moreover, take a look at the recent high court judgement on renting of immovable property where levy of such service is taken in doubt. On a safer side till the decision of Supreme Court, ST should be collected and paid to avoid further confusion.
Warm regards.
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