2005 (3) TMI 3 - AT - Service Tax

Service Tax Mandap Keeper Premises rented out for trade fair/exhibition to agencies is not business function it is business activity

Summary

Issues:
Levy of service tax on rental charges for trade fair/exhibition space.

Analysis:
The case involved a dispute regarding the levy of service tax on rental charges collected by the respondents for allowing the use of their space for trade fair/exhibition activities. The department issued a Show Cause Notice (SCN) demanding service tax, interest, and penalties under the Finance Act. The original authority upheld the demand, but the Commissioner (Appeals) allowed the assessee's appeal, leading to the Revenue's present appeal.

Upon hearing both sides, it was noted that the Commissioner (Appeal) correctly followed a previous Tribunal decision in India Trade Promotion Organisation v. CCE, Delhi, which held that service tax is not applicable to rental charges for business activities. The distinction between "function" and "activity" was crucial in determining the applicability of service tax. The Tribunal clarified that a "mandap keeper" is someone who allows temporary occupation for organizing official, social, or business functions. In this case, the rented premises were used for business activities, not functions, making the respondents not fall under the definition of "mandap keeper" for service tax purposes.

The judgment in Tamil Nadu Kalyana Mandapam Association v. UOI, cited by the Revenue, did not support their argument as it focused on providing premises for official, social, or business functions, not activities. The Tribunal's decision in India Trade Promotion Organisation decisively favored the respondents, leading to the dismissal of the Revenue's appeal. The issue was deemed to be squarely covered by the previous Tribunal ruling, affirming that no service tax was chargeable on the rental receipts for trade fair/exhibition space.

In conclusion, the judgment clarified the distinction between business activities and functions in determining the applicability of service tax on rental charges. The respondents were not considered "mandap keepers" under the Finance Act, and the Tribunal's decision supported their position, resulting in the dismissal of the Revenue's appeal.