Guest House Facilities are not included in Infrastructural Support Services: CESTAT

The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that infrastructural support services do not include Guest House Facility and cannot be classified as the provision of Business Support Services (BSS).

M/s. Anand Automotive Ltd., the appellant, has guest rooms in several locations and permits employees of group firms to use them on official travels. To cover the costs of such use, the appellant bills its group firms and prints debit notes. Additionally, employees of the appellant live in portions of the guest homes, as well as those of its group firms. The appellant recovers electrical and maintenance fees from such employees, which are included in transit house income in the books of accounts and are not subject to service tax, according to the appellant, as the same would be service to one’s own self. It is claimed by the appellant that these arguments, backed up by relevant invoices, were put before the Commissioner in response to the show-cause notice, but no notice of this reply has been published, and the demand has been confirmed without any explanation.

Short-term housing facility provision, according to the appellant, is particularly included by the definition of ‘short-term accommodation services’ in section 65 of the Finance Act, and this service only became taxable on May 1, 2011. As a result, the appellant has paid service tax under this category from May 1, 2011. Since the appellant’s operations are only taxable as of 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) before this date.

President Justice Dilip Gupta and Technical Member P.V Subba Rao observed that the provision of short-term lodging facilities is particularly encompassed under “short term accommodation services,” which have been subjected to service tax since May 1, 2011, under section 65(105) (zzzzw) of the Finance Act. As a new entry, this service cannot be listed under any other category, including BSS, prior to May 1, 2011, as it was not carved out of any other existing service.

Thus, CESTAT decided that infrastructure support services only cover those listed in the Explanation, i.e., the provision of office space. There will be no infrastructural support services provided for accommodations or guest houses, hence they are not included in BSS.