The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has upheld the Service Tax demand of Rs. 3.44 Crore on hotel’s promotional marketing activities.
The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya, (Technical Member) has observed that the promotional activities for the marketing and sales of Golden Palm Hotel & Spa, which included inserting advertisements in daily newspapers, magazines, television channels, placing hoardings, contracting and reaching people over the telephone, inform the public of the facility and amenities of the hotel etc. provided by the appellant/assessee are neither covered under Section 66D of the Finance Act nor fall under any exemption notification.
The appellant/assessee, M/s VCI Hospitality Ltd. were registered with Service Tax Department. The company entered into an agreement with World Resort Ltd. (WRL), Bangalore to carry out promotional activities for the marketing and sales of Golden Palm Hotel & Spa which include inserting advertisements in daily newspapers, magazines, television channels, placing hoardings, contracting and reaching people over the telephone, informing the public of the facility and amenities of the hotel etc.
As the appellant was alleged to be providing taxable services, the Department issued a show cause notice to the appellant.
The appellant did not file any reply to the notice nor did they appear for personal hearing before the Commissioner. Hence, the order was passed against which the present appeal has been filed. No one appeared for hearing before the Tribunal despite the matter being listed ten times. Hence we proceed to decide the matter based on the submissions made on the grounds of appeal.
The appellant submitted that the burden of proof for any demand and confirmation of service tax lies on the department. Therefore, the department has to establish the nature of services provided by the appellant, service recipient and the consideration realised for such provision of service.
The tribunal held that Business Auxiliary activities related to promotion, marketing and customer care were made taxable under ‘Business Auxiliary services’ by the Finance Act, 2003, with effect from 01.07.2003. The Finance Act, 2004 and Finance Act, 2005, subsequently, enhanced the scope of activities forming part of business auxiliary services which included almost every service of procurement of inputs for the client, production or processing of goods (not amounting to manufacture) for and on behalf of the client and provision et service on behalf of the client became taxable under this head.
Case Details
Case Title: M/s. VCI Hospitality Limited Versus Commissioner of Central Tax
Case No.: Service Tax Appeal No.51850 Of 2018
Date: 09.05.2025
Counsel For Appellant: None
Counsel For Respondent: Anand Narayan
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