Rajinikanth gets relief in ₹56L service tax case
What's the story
In a major relief for veteran Tamil actor Rajinikanth, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed a service tax demand of around ₹56.84L. The demand concerned rent from a multi-story building owned by Rajinikanth in Chennai's Kodambakkam area, leased to Vasantha Bhavan Hotels for hotel operations.
Legal decision
Tribunal's ruling on service tax exemption
The tribunal ruled that renting property for hotel operations is exempt from service tax under the Finance Act, 1994, even with amenities like restaurants or conference halls. Judicial Member Ajayan T.V. and Technical Member M Ajit Kumar noted these facilities boost the hotel's viability but do not constitute separate commercial services.
Tax dispute
Tax demand raised by authorities
The tax demand was raised by authorities who claimed that Rajinikanth failed to pay service tax on rent for the property leased between June 2007 and June 2012. They argued that the property was commercially used, hence attracting service tax. The actor's legal team countered this by stating that the building was used as a hotel, which is exempt from service tax.
Case conclusion
CESTAT rejected department's argument
CESTAT rejected the department's argument that the property was not exclusively used for accommodation. The tribunal observed that although the hotel included a restaurant, banquet hall, conference hall, bar, and health club, these facilities are integral to hotel operations and do not qualify as separate commercial activities. Consequently, the tribunal quashed the tax demand and ruled that Rajinikanth is entitled to consequential relief.