2018 (10) TMI 32 - AT - Service Tax

Mandap Keeper Services - amounts have been collected as rental amount from persons who book the hall and in addition, an amount as donation has also been collected in the name of Wellingdon Charitable Trust - Extended period of limitation - Held that - There has been considerable laxity on the part of the department. Nothing prevented them from issuing SCNs in 2004 itself when after collecting information, appellants had been advised by the department that service tax liability is required to be paid on the amount of donation - We are also unable to fathom why such a contentious issue was not again examined in two subsequent audits. We are not able to find any infirmity with the orders of the Commissioner (Appeals) that extended period cannot be invoked; that in the case of SCN No.234/2008 dt. 22.09.2008 in respect of Rani Meyyammai Hall, the demand for the period from 23.09.2007 to 30.11.2007 alone will survive; that similarly, in the case of SCN No.234/2009 dt. 22.9.2008 in respect of Raja Muthiah Hall the demand only for the period 23.09.2007 to 30.11.22007 alone will survive. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Demand of service tax on "donations" collected by Mandap Keepers.
2. Invocation of extended period for demand of service tax.
3. Imposition of penalties under Section 76, 77 & 78 of the Finance Act, 1994.

Analysis:

Issue 1: Demand of service tax on "donations" collected by Mandap Keepers:
The case involved two respondents, Rani Meyyamai Hall and Raja Muthiah Hall, owned by a charitable trust, providing taxable services as Mandap Keepers. The dispute arose when service tax was not paid on amounts collected as "donations" in addition to rental charges. The original authority confirmed the demand of tax on donations, along with interest and penalties. The Commissioner (Appeals) held that service tax is payable on Mandap keeper services, including donations, as they are connected to the rent charged for the halls. The lower appellate authority restricted the demand to a normal period and set aside the penalty under Section 78.

Issue 2: Invocation of extended period for demand of service tax:
The department contended that the extended period should be invoked due to non-disclosure of donation collections by the respondents. However, the Commissioner (Appeals) held that the department was aware of the matter since 2004, and thus, the extended period could not be invoked. The Tribunal noted the laxity of the department in following up on the matter and found no fault with the decision to not invoke the extended period. The demand for a limited period was upheld for both respondents.

Issue 3: Imposition of penalties under Section 76, 77 & 78:
The department argued against setting aside the penalty under Section 78, citing non-disclosure of donations by the respondents. However, the Tribunal upheld the decision of the Commissioner (Appeals) to set aside the penalty under Section 78, considering the circumstances and lack of follow-up by the department. The appeals filed by the department were dismissed, and the orders of the lower authorities were upheld.

In conclusion, the Tribunal dismissed the appeals filed by the department, affirming the decision of the Commissioner (Appeals) regarding the demand of service tax on donations, the invocation of the extended period, and the imposition of penalties under Section 78.