service tax on let out building used for hotel

sir,

3directors purchase the building in individual capicity and give it on lease to  pvt ltd of the same director and start the hotel provide lodging and boarding facility to public. after 2 year company  rented this property to another company they used this property for same nature of business(lodging and boarding).

situation as follows

x,y,z directors lease out building to "a" company and  company pay lease rent to directors for this 1lakh p.m.each director.

after 2 year "a" company let out property  to" b" company and b company pay lease rent to "a' company 36lakh

 

whether renting of property liable to service tax or not  .

defination given in the act for immovable property excludes "building used for hotel"  so i confuse whether we should pay service tax or not

whether both directors and company "a" liable to pay service tax

please solve my query

Replies (1)

What you are saying here is that the company "a" is basically sub-letting the premises to company "b".

Sub-letting is taxable under service tax but in this situation it will be not.

The liability arises when the premises is used for the purpose of work which comes in the ambit of service tax i.e. business and commerce. But as the renting for hotel are specifcally exempted so the liablility of the main company or the sub-let company will be nil.

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