2017 (5) TMI 884 - AT - Service Tax

Providing / hiring and renting out the halls / open spaces/ theaters and auditoriums to various parties - The appellant contested the allegations stating that they being statutory body, exempted from payment of service tax and in any case extended period cannot be invoked against them as they were under bonafide belief that they are not liable to pay service tax - whether appellant is required to discharge the service tax liability under the category of mandap keeper services or otherwise? Held that - Definition of mandap keeper services u/s 65 (67) clearly indicates that a person who allows temporary occupation of a mandap for a consideration for organizing any official, social or business functions such activity is taxable. Appellant is not disputing the fact that renting out the halls / open spaces/ theaters and auditoriums to their clients are allowed for temporary occupation for a consideration - the services rendered by the appellant gets covered u/s 65(105)m of the FA, 1994. Extended period of limitation - Held that - appellant being BrihanMumbai Municipal Corporation and a statutory body, could not be held to have been suppressing the facts with intent to evade service tax liability - extended period not invocable. The demand of service tax can be upheld for the normal period of limitation and not for the extended period - adjudicating authority is directed to recompute the tax demand for the normal period of limitation and intimate the same to the appellant for discharge of the same - appeal allowed by way of remand.

Summary

Issues:
1. Whether the appellant is required to discharge the service tax liability under the category of 'mandap keeper services' or otherwise.

Analysis:
The appeal was directed against an Order-in-Original which demanded service tax under 'mandap keeper services' for the period 01.10.1998 to 30.09.2003. The appellant, a statutory body, contested the demand stating they were exempt from service tax and that the extended period cannot be invoked as they believed they were not liable to pay. However, the adjudicating authority disagreed, confirmed the demand, imposed penalties, and appropriated deposited amounts.

Upon review, it was found that the amounts received by the appellant for renting out halls, open spaces, theaters, and auditoriums were taxable under 'mandap keeper services'. The definition of mandap keeper services under Section 65(67) clearly includes temporary occupation of a mandap for a consideration. The appellant did not dispute that renting out spaces to clients constituted temporary occupation for consideration, making it taxable under Section 65(105)m of the Finance Act, 1994. Despite this, the show-cause notice invoked the extended period of limitation.

The Tribunal held that the appellant, being a statutory body, could not be considered to have suppressed facts to evade service tax liability. Citing a previous decision involving a similar issue, it was established that there was no mala fide intention to evade payment of service tax by government bodies. Therefore, the demand for service tax was upheld for the normal period of limitation, not the extended period. The adjudicating authority was directed to recompute the tax demand for the normal period and the appellant was held liable to pay interest on the recomputed tax liability. Additionally, the penalties imposed on the appellant were set aside based on the statutory body status.

In conclusion, the appeal was disposed of with the decision that the appellant was liable to pay service tax for the normal period of limitation, interest on the recomputed tax liability, and that the penalties imposed were set aside due to the appellant being a government body.