#Tax / Indirect Tax (Service Tax)

CESTAT Hyderabad rules that repair and maintenance services for Indian Navy ships and dockyards are exempt from service tax because they serve sovereign, non-commercial governmental functions, not commercial activities. This clarifies the scope of exemption for defence-related infrastructure contractors and reinforces the principle that state functions, even when outsourced, do not trigger indirect tax liability unless commercial in nature.

CESTAT rules that salaries paid by hotel owners to key managerial staff under a hotel operating agreement are not includible in the 'operator fee' for service tax valuation under Section 67 of the Finance Act. The decision clarifies that only amounts directly linked to the provision of taxable services can be taxed, protecting hotel owners from inflated tax liabilities.