2017 (4) TMI 948 - AT - Service Tax

Mandap Keeper Services - the hotel rooms hired by the persons at the time of hiring the mandap/garden area to conduct marriage etc - Revenue case is that room rent received is also to be considered as an amount received in connection with providing Mandap Keeper Services - Held that - The Tribunal examined similar set of facts and held that such room charges for letting out the rooms in the hotel cannot be included in the Mandap Keeper Service for service tax liability - Reference can be made to the decision of the Tribunal in the case of Rambagh Palace Hotels Pvt. Ltd. Vs. Commissioner of Central Excise, Jaipur, 2013 (12) TMI 556 - CESTAT NEW DELHI - appeal allowed - decided in favor of assessee.

Summary

Issues:
Interpretation of service tax liability under "Mandap Keeper Services" for charges related to hotel rooms booked for guests during events.

Analysis:
The judgment involved two appeals against a common order of the Commissioner (Appeals) Jaipur-II, where the Revenue also filed an appeal challenging the non-imposition of penalty under Section 76 of the Finance Act, 1994. The dispute revolved around the service tax liability on charges received for letting out hotel rooms in connection with providing "Mandap Keeper Services."

The appellant argued that the rooms provided for temporary occupation by guests should not be taxed under "Mandap Keeper Services" as they were part of the regular hotel business. They contended that service tax was being discharged only on the consideration received for letting out the garden area/mandap for events like marriages and ceremonies.

The Revenue, on the other hand, supported the findings of the impugned order and sought the imposition of penalties under Section 76 of the Finance Act, 1994, emphasizing that penalties under both Sections 76 and 78 were leviable before the amendment of Section 78.

Upon examination, the Tribunal found that the charges collected for letting out hotel rooms for accommodating guests should not be included in the gross value for service tax liability under "Mandap Keeper Services." The Tribunal referenced a previous decision in the case of Rambagh Palace Hotels Pvt. Ltd. Vs. Commissioner of Central Excise, Jaipur, where it was held that renting hotel rooms could not be considered part of the "Mandap Keeper" activity as hotels have a distinct identity and function separate from mandaps.

Based on this precedent, the Tribunal concluded that the impugned order was not legally sustainable. Consequently, the order was set aside, and the appeals of the appellant-assessee were allowed, while the appeal filed by the Revenue was dismissed. The cross objection was also disposed of in favor of the appellant.

In light of the legal analysis and precedent cited, the Tribunal's decision clarified the scope of service tax liability under "Mandap Keeper Services" concerning charges related to hotel rooms provided for events, ultimately ruling in favor of the appellant-assessee and providing consequential relief.