2026-VIL-977-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Taxability of Complimentary accommodation services provided to employees without consideration – Audit observed that the appellant provided complimentary rooms to staff members who were staying at the hotel but not paying service tax on the accommodation services provided free of cost to staff members - Whether service tax is payable on complimentary rooms provided by a hotel to its employees during their duty period – Demand for reversal of input tax credit for inputs used in providing such complimentary services – HELD - Since no consideration is received by the hotel for providing complimentary accommodation services, no service tax is payable - The adjudicating authority has taken a contradictory stance by holding that no consideration has been received and therefore no service tax is payable, while simultaneously holding that the service is an exempted service and requiring reversal of input tax credit - A service must have consideration to be taxable or exempt, and since there is no consideration received for the complimentary accommodation, the service cannot be classified as either taxable or exempted. The revenue cannot place itself in two boats simultaneously by denying taxation on the ground of no consideration while demanding reversal of input tax credit on the basis of exemption. Therefore, the question of reversal of input tax credit does not arise, and the demand for recovery of input tax credit from the assessee is not sustainable - The impugned order is set aside to the extent it required reversal of input tax credit - The appeal filed by the assessee is allowed and the appeal filed by the revenue is dismissed
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