2013 (12) TMI 100 - AT - Service Tax

Demand of service tax along with interest - Receipt of charges as donations - Whether the amounts which are collected as donations while booking the hall are to be treated as gross amount received for providing service of mandap keeper - Held that - hall is booked on the condition that the service recipient will pay the donation. As the donation is compulsory for booking of the hall for social function, in these circumstances, we find no merit in the contention of the appellant-assessee that this amount is not to be counted towards the gross amount towards booking of the hall for social function. In respect of the extended period of limitation, we find that the appellant-assessee never disclosed to the Revenue that they are collecting donations at the time of booking of the hall hence we find no infirmity in the impugned order whereby the demand is confirmed after invoking the extended period of limitation - assessee were following the same practice which was prevalent prior to the introduction of service tax on mandap keeper and it is not the case of the Revenue that the practice was adopted by the appellant-assessee after the introduction of service tax as a mandap keeper, therefore we find that the penalty imposed under the impugned order will meet the ends of justice - Decided partly against assessee.

Issues: Whether donations received while booking a hall are to be considered as part of the gross amount for providing the service of a mandap keeper.

Analysis:
The appellant, a Charitable Trust registered as a provider of taxable service of mandap keeper, appealed against an order upholding a demand of Rs.3,51,192/- along with interest, while reducing the penalty to Rs.90,000/-. The Revenue alleged that donations received by the appellant from individuals booking halls for social functions should be included in the gross amount subject to service tax. The appellant contended that the donations were separate from the service charges and should not be considered as consideration for the service provided. They argued that the practice of accepting donations predated the imposition of service tax on mandap keepers and was not intended to evade tax. The Revenue, however, maintained that donations were mandatory for hall bookings and should be factored into the gross amount received for the service.

The Tribunal found that the issue revolved around whether donations collected during hall bookings should be deemed part of the gross amount for providing the service of a mandap keeper. It was established that the hall bookings were conditional upon paying donations, indicating a direct link between the donations and the service provided. As the donations were compulsory for booking the hall for social functions, the Tribunal rejected the appellant's argument that the donations should not be included in the gross amount. Regarding the extended period of limitation, it was noted that the appellant had not disclosed the practice of collecting donations to the Revenue, leading to the dismissal of the appeal due to lack of disclosure.

Additionally, the Revenue's appeal against the reduced penalty was also addressed. The Tribunal upheld the penalty reduction to Rs.90,000/- under Section 80 of the Finance Act, considering that the appellant had maintained the donation practice before the introduction of service tax on mandap keepers. Since the Revenue did not assert that the practice was adopted post the tax introduction, the penalty imposed was deemed sufficient, and the Revenue's appeal was dismissed.

In conclusion, the Tribunal affirmed the demand against the appellant for including donations in the gross amount for providing the service of a mandap keeper and upheld the penalty reduction decision, emphasizing the importance of prior practice and lack of evidence of post-tax introduction adoption.

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