2005 (5) TMI 2 - AT - Service Tax

Summary

Issues:
Challenge to correctness of OIA holding appellant as "Mandap Keeper" and demanding service tax on amounts collected for marriage functions.

Analysis:
The appellant contested being classified as a "Mandap Keeper" and the subsequent service tax demand, arguing their registration as a "club" for sports, recreational activities, and social welfare. They relied on a previous judgment where 'marriage' was deemed a religious function, exempt from service tax under Hindu Law. Additionally, they cited a Calcutta High Court ruling distinguishing between a "Club" and a "Mandap Keeper," asserting that a club cannot be equated with the latter. The Tribunal found the precedents applicable, noting similarities in club structures and concluding that a club and its members are essentially the same entity. The Court held that transactions between members and the club do not constitute taxable income, sale, or service, aligning with the revenue tax laws. Consequently, the demand for service tax on the appellant was set aside, and the appeal was allowed.

The Departmental Representative reiterated the department's stance on the matter without introducing new arguments.

Upon careful consideration of the submissions, the Tribunal found the judgments in the cases referenced by the appellant to be directly relevant to the present dispute. The analysis of the Calcutta High Court in the Saturday Club Ltd. case, which compared the Memorandum and Articles of Association of a club to the instant case, highlighted the similarities and distinctions between a "Mandap Keeper" and a "Members Club." By emphasizing that members and the club are essentially one entity, with one acting as the "principal" and the other as the "agent," the Court concluded that service tax cannot be levied on a members' club for allowing space usage as a 'mandap'. The Tribunal, applying the ratio of the Calcutta High Court's analysis, set aside the service tax demand on the appellant, ultimately allowing the appeal and overturning the impugned order. The operative portion of the order was pronounced in open court at the conclusion of the hearing.