2013 (9) TMI 472 - AT - Service Tax

Activity Taxable OR Not - Mandap Keeper Services - Whether marriage is a religious function - The department was of the view that the said activity came under the purview of Mandap Keeper Services - Held that - The marriage was a social function and not a religious function - The mode of conducting the marriages either by following religious rituals or otherwise does not make marriage a religious function Following Shri Gujarati samaj Bhavan Vs. Commissioner of Central Excise, Bhopal 2006 (6) TMI 470 - CESTAT NEW DELHI - insertion of the explanation does not affect the levy of Service Tax on Mandap Keeper Service rendered in connection with marriages. Marriage as a social institution existed much before the religions came into being and, therefore, it was futile to argue that the marriage was a religious function. The law itself recognizes registered marriage as a legally valid form of marriage and there was no religious sanctity attached to such registered marriages. Order was set aside Revenue s appeal was allowed subject to the modification that the demand was sustainable only for the normal period of limitation - Needless to say the respondent was liable to pay interest on the Service Tax demand - Imposition of penalty was not warranted in the case - the Revenue was directed to re-compute the Service Tax demand - Since the appellant had not collected the Service Tax separately, the amount received shall be considered as cum tax and Service Tax amount be computed accordingly.

Summary

Issues:
1. Whether renting out a hall for conducting marriages falls under 'Mandap Keeper Services' for Service Tax purposes.
2. Whether marriage should be considered a religious function or a social function.
3. Applicability of the explanation added in the Finance Act, 2007 to determine the nature of marriage.
4. Time bar for demanding Service Tax for the extended period.
5. Imposition of penalties on the appellant.

Analysis:

Issue 1:
The Revenue appealed against an Order-in-Appeal regarding the taxation of renting out a hall for marriages under 'Mandap Keeper Services.' The lower appellate authority held that marriage being a religious function is not taxable, citing precedent. The Revenue contended that marriage is a social function, supported by a Tribunal decision. The Tribunal concluded that marriage is a social function, not religious, based on legal recognition of registered marriages and upheld the appeal.

Issue 2:
The debate centered on whether marriage is a religious or social function. The respondent argued that the Finance Act, 2007, clarified marriage as a social function for Service Tax purposes post-2007. The Tribunal rejected this, stating marriage predates religions and registered marriages lack religious sanctity, thus deeming it a social function. The insertion in the Finance Act was deemed cautionary, not altering Service Tax on Mandap Keeper Services for marriages.

Issue 3:
Regarding the time bar for demanding Service Tax, the Tribunal acknowledged the appellant's belief, influenced by precedent, that their activity was not taxable. Consequently, the demand was deemed sustainable only within the normal limitation period, granting the appellant the benefit of doubt.

Issue 4:
Penalties on the appellant were contested due to the statutory interpretation issue. The Tribunal ruled penalties unnecessary, leading to the setting aside of the impugned order and allowing the Revenue's appeal with modifications for the demand's limitation period. Interest on Service Tax was mandated, and penalties were waived due to the interpretational nature of the issue.

This comprehensive analysis highlights the legal nuances and arguments presented in the judgment, providing a detailed understanding of the decision's rationale and implications for each issue involved.