2013 (12) TMI 556 - AT - Service Tax

Demand of service tax - Mandap Keeper and Convention Service - Held that - renting of hotel rooms cannot be held to be covered by the definition of Mandap Keeper inasmuch as the hotel has an identity, personality and function quite distinguishable from that of a mandap. In any case, we find that the activity of giving hotel rooms to the customers, who might organise function in the hotel is an activity entirely different from the mandap keeper activity. The definition of Mandap Keeper nowhere covers the temporary occupation of hotel rooms or the purpose of boarding, temporary residence. It is not disputed that no function is held in the hotel room which is used for the purpose of staying in the same. As such, we are of the view that the order of the lower authorities holding inclusion of the hotel rooms rent into the value of Mandap Keeper Service is not sustainable - Decided in favour of assessee.

Summary

Issues:
1. Whether the renting charges for rooms booked for events should be included in the value of Mandap Keeper Service for service tax calculation.
2. Whether the longer period of limitation can be invoked due to alleged suppression of facts by the appellant.

Analysis:
1. The appellant was engaged in providing Mandap Keeper and Convention Service, having discharged service tax on banquet charges but not on room charges booked for events. The Revenue contended that room charges should be included in the value of mandap keeper service. The Commissioner (Appeals) upheld this view, stating that renting rooms for events falls under Mandap Keeper Service. However, the Tribunal in a precedent decision (Merwara Estates v. C.C.E., Jaipur) held that hotel rooms' renting is distinct from Mandap Keeper activity as hotels have a separate identity. The Tribunal found that providing hotel rooms for temporary stays, not for functions, does not align with the Mandap Keeper definition. Thus, the lower authorities' decision was deemed unsustainable, and the appeal was allowed in favor of the appellant.

2. The Commissioner (Appeals) also upheld the longer period of limitation invocation due to the alleged suppression of facts by the appellant regarding room charges. However, the Tribunal's decision to set aside the inclusion of room rent in Mandap Keeper Service value also nullified the basis for invoking the longer period of limitation. As the Tribunal ruled in favor of the appellant on the primary issue, the invocation of the longer period of limitation was not sustained. Consequently, the appellant was granted consequential relief due to the allowance of the appeal.