2017 (5) TMI 465 - AT - Service Tax

Mandap Keeper Service - appellant herein were providing rooms for corporate clients for holding conferences, meetings, etc - It is the case of Revenue that appellant should have discharged service tax liability under the category of Mandap Keeper Service for the relevant period as they had extended the conference room to their clients for holding meetings, etc - Appellant contested the show cause notice on the ground that they are not charging separately for the conference room and hence they are not covered under Mandap Keeper Service as they charge only room rent; the question of rendering Mandap Keeper Service does not arise - Held that - having discharged luxury tax on the room rent charged to the corporate clients they are not required to pay any service tax - the appellant was correct in contending before the lower authorities that they are not charging any additional amount towards the conference charges for use of conference halls - the view taken in the case of Merwara Estates and Rambagh Palace Hotels Pvt Ltd 2013 (12) TMI 556 - CESTAT NEW DELHI clearly apply in this case wherein the Tribunal took a view that functions and activity of giving hotel rooms while organising functions in hotels is entirely different from Mandap Keeper Service - appellant need not be taxed under Mandap Keeper Service for the entire amount of the room rent collected by them. The assessment of charging service tax under Mandap Keeper Service on the 20% of the amount collected as room rent subject to further abatement as per N/N. 21/97-ST dated 26/06/1997. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Discharge of service tax liability on income received
- Tax liability under Mandap Keeper Service for room rent
- Imposition of penalty
- Reopening of assessment ordered in earlier proceedings

Analysis:

1. The appeal was against an order by the Commissioner of Central Excise regarding service tax liability for providing rooms for corporate clients. The appellant argued they did not charge separately for conference rooms and hence were not liable under Mandap Keeper Service. The adjudicating authority confirmed the demands, and the first appellate authority upheld this decision. The appellant had previously settled a similar issue with the department in 2004. The High Court set aside the Tribunal's order and remanded the matter back for reconsideration.

2. The appellant contended that they provided room bookings for corporate clients, and any additional facilities were included in the room rent. They had settled a similar issue in 2004, paying service tax on 20% of total income attributed to conference halls. The appellant argued that the show cause notice only demanded penalties, while the authority imposed tax on total income, which was incorrect. They provided invoices and VAT returns to support their claim.

3. The Authorized Representative supported the first appellate authority's findings, stating that the appellant had already discharged service tax liability under Mandap Keeper Service. However, the valuation adopted was challenged, suggesting that tax should be levied on the entire room rent amount received.

4. The Tribunal considered whether the appellant was required to discharge service tax liability on their income, whether they were liable under Mandap Keeper Service for room rent, the imposition of penalties, and the reopening of the earlier assessment. The High Court had directed the Tribunal to consider further evidence, which the appellant submitted through additional invoices, VAT returns, and the 2004 adjudication order.

5. Upon reviewing the additional evidence, the Tribunal found that the appellant only charged room rent to corporate clients and did not separately bill for conference halls. The Tribunal cited previous cases to support the appellant's argument that their services did not fall under Mandap Keeper Service. The Tribunal held that the lower authorities erred in taxing the appellant under Mandap Keeper Service for the entire room rent amount.

6. The Tribunal noted that the adjudicating authority's 2004 order, which was accepted by both parties, had concluded that the appellant did not charge separately for conference halls. As this issue had attained finality, the Tribunal held that Revenue could not raise the same issue again. Therefore, the impugned orders were deemed unsustainable and were set aside, with the appeals allowed.