Tax Trouble Brews: Lemon Tree Hotels Hit with Service Tax Recovery Order

Lemon Tree Hotels and its wholly owned subsidiary, Oriole Dr. Fresh Hotels, received tax recovery orders (from FY 2012-13 to FY 2017-18) from the Principal Commissioner of Central Goods & Service Tax, Delhi South Commissionerate.

The order contains interest and penalties imposed on the company for short payment and non-payment of Service Tax on the abated value of the service charge collected from customers. Lemon Tree disclosed the matter to NSE and BSE as mentioned in the Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

The parent company, i.e., Lemon Tree Hotels Ltd received two separate orders which include:

Order No. 1:

• Date: June 18, 2025
• Duration Covered: April 2017 to June 2017
• Demand: Tax: Rs.2,55,118, Penalty: Rs.25,512, Interest: Calculated under Sections 73 & 75 of the Finance Act, 1994

Order No. 2:

• Date: June 25, 2025
• Duration Covered: July 2012 to June 2017
• Demand: Tax: Rs.2,689,339, Penalty: Rs.26,99,339, Interest: Under Sections 73 & 75

While Oriole Dr Fresh Hotels received one order, which includes:

• Date: June 25, 2025
• Duration Covered: October 2013 to June 2017
• Demand: Tax: Rs.22,07,904, Penalty: Rs.22,17,904, Interest: Under Sections 73 & 75 of the Finance Act, 1994

The order charges Oriole with:

• Short payment of Service Tax on the abated value of the service charge collected from customers.
• Short payment of Service tax on the differential figure of revenue from operation shown in the balance sheet via the corresponding ST-3 returns.
• Non-payment of Service tax on account of import of services in respect of expenditure incurred in foreign currency.

While informing NSE and BSE about the matter, the company affirmed that there shall be no material impact on the financial operations of the company and they have filed appeal against the order.