Onus Lies On Restaurant To Prove Absence Of AC Facility To Avail Service Tax Exemption: CESTAT

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the onus lies on the restaurant to prove the absence of an AC facility to avail of service tax exemption.

The bench of Binu Tamta (Judicial Member) and P. V. Subba Rao (Technical Member) has observed that as per state rules and conditions for granting the bar restaurant licence, it was mandatory to have an air conditioning facility for obtaining and also for renewing the restaurant-cum-bar licence and the licence granted to the appellant was renewed regularly during the periods from 2011–12, 2012–13, and 2013–2014. The licence is currently valid, which means that the appellant is still running the restaurant/bar, and as per the Restaurant Bar Licence policy and law of the State Excise Department, the assessee needs to comply with the conditions linked with the grant of the licence as well as for the renewal of the licence, one of which is that an air conditioning facility is provided.

The issue raised was whether the services provided by the appellant would fall under the category of restaurant-cum-bar service as defined under Section 65(105)(zzzzv) and whether the appellant is liable to pay the service tax.

The appellant/assessee is in the business of providing "restaurant services" but is neither registered with the department nor paying service tax. The Superintendent, Central Excise and Service Tax Range, Beawar, visited the business premises of the assessee.

It appeared that restaurants are engaged in providing taxable services, viz., "restaurant service. Hence, the service provider was requested to get themselves registered with the department to pay service tax and also provide details of the amount received on account of services provided by them during the period from May 2011 and onwards.

The assessee has provided the services under the category of "Restaurant Service," defined under Section 65(105)(zzzzv), is taxable under Section 66 till December 31, 2013 and thereafter under Section 66B of the Finance Act, 1994, and has a valid licence to serve alcoholic beverages issued by the State Government.

As per VAT Returns, service providers have received Rs. 1,49,23,237/- from 01.05.2011 to 31.03.2015 from restaurant and bar service, and after granting Rs. 10 lakhs exemption in terms of Notification No. 6/2005 (ST), taxable values come to Rs. 1,39,23,237.

During the period from May 2011 to March 2015, the notice appears to have evaded service tax of Rs. 6,36,396/- under restaurant service, and it appeared recoverable from them in terms of Section 73(1) of the Finance Act, 1994, along with interest under Section 75.

The appellant, in terms of a summons dated December 19, 2012, appeared on December 28, 2012, and in his statement recorded under Section 14 of the Act, stated that on August 7, 2010, when he obtained his bar licence, he had air conditioning facilities in his restaurant and bar, but the air conditioner was removed and instead air cooling facilities through an air cooler were provided by the end of 2010 until December 31, 2012.

However, on inquiry, a copy of the application along with the declaration as submitted by the appellant for obtaining the liquor licence was produced by the State Excise Department, which clearly mentioned that the restaurant is air conditioned.

The tribunal found that the department has fully investigated the case with the state authorities, both on facts as well as on the legal aspect, to ascertain the status of providing air conditioning facilities in the restaurant and bar.

The CESTAT held that unless and until the appellant is able to produce any cogent and substantive evidence in support of his statement that he does not have the AC facility in the restaurant, he is not eligible to claim the benefit of the exemption notification. The burden lies on the appellant to prove his case that he falls under the exemption notification as there is no AC facility in his restaurant, which he has failed to do.

Case Title: Gurukripa Yuvraj Veg. & Non-veg. Restaurant Versus Commissioner and Additional Director General

Case No.: Service Tax Appeal No. 51002 of 2018

Date: 23.08.2023

Counsel For Appellant: M. B. Maheshwari

Counsel For Respondent: S. K. Meena

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