2004 (11) TMI 4 - AT - Service Tax

Service Tax - Mandap Keeper - Any service of Mandap keeper in relation to Mandap is taxable service - Whether the donations received by them from M/s. Shree Saideep Caterers is to be treated as a part of taxable service - HELD THAT - It is clearly mentioned in both the Agreements that Hirer always require the services of catering contractors and services of Decorators and as the Trustees, Office bears and the members of the Managing Committee of the Respondents are honorary workers and as such are unable to render these services to the hirers and Shri Saideep Caterers have approached them for rendering these services on certain terms and conditions mutually agreed and accepted. As per the terms and conditions, Shri Saideep Caterers shall have the exclusive right to render the services of catering and Decoration, at the rates mutually agreed and specifically mentioned in Schedule A attached to Agreements. The other term and condition is that the Contractor (Shri Saideep Caterers Decorators) have agreed to pay a total sum of Rs. 2,00,000 (Catering Agreement) and Rs. 1,75,000 (Decoration Agreement) as and by way of contribution to corpus to the Respondents. The Agreements further contain the condition that the Respondents shall not let out their community hall to any such person who refuses to avail of the services of the Decorators and caterers as and when such services are required. It is thus apparent that the Respondents have entered into two exclusive agreements with Shri Saideep Caterers Decorators for providing the services of catering and decoration to the persons who hire their community hall for social, cultural or religious functions as they are unable to render these services to their hirers. Further, the hirer is bound to avail of these services, if these services are required by them, from Shri Saideep Caterers Decorators only who have agreed to way contribution to corpus of the Respondents. As such the Respondents are providing the facilities of catering and decoration to their client in relation to use of mandap. The service charges are received by them through Shri Saideep Caterers and Decorators as contribution to their Corpus. As per the definition given in Section 65(105)(m) of the Finance Act, 1994, taxable service includes the facilities provided to the client in relation to use of mandap. The expression in relation to is equivalent to 'concerning with' or 'pertaining to' and is expression of comprehensiveness. Thus any service which has a direct or indirect connection with use of mandap has to be treated as in relation to mandap, and has to be part of the taxable service in respect of which Service Tax has to be levied. Accordingly we set aside the impugned Order and allow the appeal filed by Revenue.

Summary

Issues involved:
Whether the Service Tax and interest paid to M/s. C.K.P. Mandal is refundable.

Analysis:

Issue 1: Refundability of Service Tax and interest to M/s. C.K.P. Mandal

The appeal filed by Revenue questioned the refundability of Service Tax and interest paid to M/s. C.K.P. Mandal. M/s. CKP Mandal, acting as Mandap Keeper, had entered into an agreement with Saideep Caterers for catering and decoration services in their hall. The Department considered the payment received from Saideep Caterers as payment related to the services provided by the Mandap Keeper, subject to Service Tax. The Assistant Commissioner initially rejected the refund claim, stating that the donation received by M/s. CKP Mandal had a correlation with the frequency of hall occupation, making it part of the mandap keeping service. However, the Commissioner (Appeals) allowed the appeal, emphasizing that Service Tax is leviable only on services provided by the Mandap Keeper directly to clients for mandap use, excluding charges for facilities provided by the caterer. The issue revolved around whether the donations received by M/s. CKP Mandal from Saideep Caterers were part of the taxable service provided by the Mandap Keeper.

Issue 1 Analysis:
The Tribunal considered Section 65(90)(m) of the Finance Act, 1994, defining taxable service by a Mandap Keeper as services provided in relation to mandap use, including facilities and catering services. The Tribunal acknowledged that M/s. CKP Mandal allowed temporary mandap occupation for functions and had agreements with Saideep Caterers for catering and decoration services. These agreements outlined the exclusive rights of Saideep Caterers to provide these services, with the hirers obligated to avail of them. Saideep Caterers paid a sum to M/s. CKP Mandal as a contribution. The Tribunal concluded that the donations received were part of the taxable service, as M/s. CKP Mandal facilitated catering and decoration services for hall hirers through Saideep Caterers. The comprehensive connection between the donations and mandap use mandated Service Tax levy. Therefore, the Tribunal set aside the previous decision and allowed the appeal filed by Revenue.

This detailed analysis of the judgment highlights the key legal arguments and conclusions regarding the refundability of Service Tax and interest to M/s. C.K.P. Mandal, providing a thorough understanding of the case.