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Revision No.1 (54)/CE Rev. of 1.987, decided on 30th July, 1988.
S.4(3) Excise duty when to be leviable on services rendered by hotel Excise duty was leviable on services, rendered and facilities and utilities provided by the hotel, irrespective of the actual recipient of those facilities Rooms used for residential purposes either by Management or by an official in the employment of hotel, so long as he resides in the hotel and avails the excisable services, are chargeable to excise duty at standard rate.
R.96 Remission of additional duty Additional duty levied upon hotel as penalty due to misunderstanding of definition of services and facilities, was remitted.
Nazar Khan for Petitioner.
S. Tahammul Hussain for Respondent.
This revision application is directed against Order in Appeal No.87 of 1987 dated 31st May, 1987 passed by the Collector of Central Excise & Customs (Appeals), Northern Zone, Lahore.
2. The impugned order confirms Order in Original No.12 of 1987 passed by the Deputy Collector, Central Excise Lahore, to the effect that the applicants should pay excise duty amounting to Rs. 9,35,834 alongwith additional duty of Rs. 4,67,917 under Rules 96 (W) of the Central Excise Rules, 1944 for the period from 1st January, 1980 to 31st December, 1983. The duty was demanded under the following categories:
Category 1.
A sum of Rs. 02,55,017.13 has been demanded against the rooms shown under self use by the management of the Hotel.
Category 2.
A sum of Rs. 04, 25,100 has been found short paid on account of these rooms which were occupied by the General Manager of the Hotel during the period under reference.
Category 3.
A sum of Rs. 02,55,716 has been demanded on account of transportation charges to Hill tours organised by the Hotel and for hair dressing charges incurred within the premises of the Hotel.
3. The case was heard on 13th January, 1988 at Karachi. Mr. Nazar Khan, Advocate, appeared for hearing on behalf of the applicants. He was assisted by M/s. Mansoor, Tariq Masood, Controller Finance, and Saeed Muzaffar Zia, Sales Officer of the Hotel. The counsel reiterated the arguments given in the revision application and advanced before the appellate authority and requested for early decision on the same basis.
4. The record of the case and the submissions made by the learned counsel have been considered carefully. The legal position is that excise duty is leviable on services, facilities, and utilities rendered by the Hotel, irrespective of the actual recipient of these facilities. Section 4(3) of the Central Excises and Salt Act, 1944 contemplates that any such services, facilities or utilities are, in any case, rendered or provided free of charge or at a concessional rate, the duty shall be levied and collected on the amount which would have been charged for such facilities and utilities had they not been rendered or provided free of charge or at a concessional rate. It is therefore quite clear that rooms used for residential purposes either by the management or by an official in the employment of the Hotel, so long as he resides in the Hotel and avails the excisable services as defined in Section 2(dd) ibid, are chargeable to excise duty at the standard rate. I therefore, see no reason to disturb the orders passed by the officers below, except that additional duty levied upon the applicants as penalty is remitted, as it was caused due to misunderstanding of the definition of services and facilities.
5. The revision application is allowed to the above extent.
A. A./309/R
Revision allowed.
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