2007 (6) TMI 489 - AT - Service Tax

Summary

Issues:
1. Interpretation of the term "mandap keeper" for service tax levy.
2. Distinction between cultural events and social functions.
3. Applicability of service tax on renting out premises for specific events.
4. Justification for invoking an extended period for tax demand.

Analysis:
1. The appeals involved a dispute over the interpretation of the term "mandap keeper" for service tax levy. The appellants, a city corporation and a government department, rented out premises for various events. The argument focused on whether the events organized fell under the category of "social functions" as defined in the Finance Act, 1994. The definition of "mandap keeper" was crucial in determining the applicability of service tax to the services provided by the appellants.

2. The distinction between cultural events and social functions was a key point of contention. The appellants argued that events like dance, drama, and music programs should not be considered social functions. However, the tribunal disagreed, stating that cultural events are a subset of social functions. The tribunal emphasized that the term "social function" is comprehensive and includes various gatherings involving society, not limited to specific ceremonies like marriage.

3. The tribunal examined the purpose for which the premises were rented out and concluded that the services provided by the appellants did fall under the category of "mandap keeper" for service tax levy. The tribunal referred to a Board's Circular clarifying that cultural events like dance, drama, and music are considered social functions and are liable for service tax. However, instances like Kannada film shooting and political meetings were excluded from the service tax levy as they were not considered social functions.

4. The appellants contested the justification for invoking an extended period for tax demand, arguing that they believed their activities did not fall under the purview of service tax. The tribunal agreed with the appellants and restricted the tax demand to the normal period. As the issue involved the interpretation of the law, no penalties were imposed, and the appeals were partially allowed, upholding the levy of service tax but restricting the demand to the normal period.