2024 (10) TMI 1546 - AT - Service Tax

Liability of the appellant under mandap-keeper service - invocation of extended period of limitation - it is the case of the Revenue that the appellant had not only made available the food and beverages, but had also made available lights, fans, their own staff used in rendering catering service to the guests, etc. and therefore, the charges for sale of food was inclusive of these service elements - extended period of limitation - suppression of facts or not - interest - penalties - HELD THAT - N/N. 19/97 issued by the government whereby the appointed day was notified, followed by the issuance of a Trade Notice No.9/97 dated 01.07.1997, which stated that the scope of the said Notice was very wide to include within its scope, places like Kalyan mandap, marriage halls, banquet halls, conference halls, etc., and hotels and restaurants providing any such facilities would also be included in the coverage of service tax. Wide range of services are included in the definition of taxable services as far as mandap-keeper is concerned. The said definition includes services provided in relation to use of mandap in any manner and includes the facilities provided to the client in relation to such use and also services rendered as a caterer. In fact, making available a premises for a period of few hours for the specific purpose of being utilized as a mandap, whether with or without other services would itself be a service and cannot be classified as any other kind of legal concept - U/s 65(66) of the Finance Act, 1994, Mandap means any immovable property as defined in section 3 of the Transfer of Property act, 1882 and includes any furniture, fixture, light fittings, and flour covering therein, let out for consideration for organizing any official, social or business function - the Commissioner (Original Authority) was correct in confirming the demand under Mandap-Keeper Service on the appellant. Extended period of limitation - suppression of facts or not - interestt - penalties - HELD THAT - The reliance placed on the decision of Apex court in Commissioner of Service Tax, Mumbai Vs. M/s. UFO Moviez India Ltd 2021 (1) TMI 930 - SC ORDER by the appellant is apt, wherein the Hon ble court has held that suppression means failure to disclose full information with the intent to evade payment of duty - But here, in the case on hand, suppression cannot be alleged since the bonafides insofar as remittance of sales tax are not doubted. Hence, the demand confirmed which stands upheld shall be limited to the normal period alone, since there is no case of suppression whatsoever, that too, to evade payment of duty - The interest charged u/s 75 of the Act ibid also stands confirmed to the normal period alone - penalties imposed under sections 77 and 78 of the Act ibid on the appellant set aside. Appeal allowed in part.

Summary

Issues Involved:

1. Liability of the appellant under 'Mandap-Keeper' Service.
2. Invocation of extended period of limitation for fastening the service tax liability under the above service.

Issue-wise Detailed Analysis:

1. Liability of the appellant under 'Mandap-Keeper' Service:

The primary issue in this appeal revolves around whether the appellant's services fall under the 'Mandap-Keeper' category, thereby attracting service tax liability. The appellant operates a hotel providing banquet halls for large gatherings, which are used primarily for catering services. The appellant contended that the use of banquet halls was ancillary to the catering services, and since they collected sales tax on food charges, service tax should not apply. However, the tribunal referred to the definitions in Section 65 of the Finance Act, 1994, which describe a 'Mandap' as any immovable property let out for organizing functions and a 'Mandap-Keeper' as one who allows temporary occupation of such premises for a consideration. The tribunal also relied on the Supreme Court's decision in Tamil Nadu Kalyana Mandapam Association Vs. Union of India, which clarified that the provision of premises for events, with or without additional services, constitutes a service under the 'Mandap-Keeper' category. Thus, the tribunal concluded that the appellant's activities indeed fall under the 'Mandap-Keeper' service, making them liable for service tax.

2. Invocation of extended period of limitation:

The second issue concerns whether the extended period of limitation could be invoked for demanding service tax from the appellant. The original authority alleged suppression of facts by the appellant, as they did not declare the gross value of service income in their statutory returns, thereby evading service tax. However, the appellant argued that they acted under a bona fide belief that only sales tax was applicable, as they considered their services to involve only the sale of food. The tribunal noted that the appellant consistently collected and remitted sales tax, and there was no evidence of intent to evade service tax. The tribunal referenced the Supreme Court's decision in Commissioner of Service Tax, Mumbai Vs. M/s. UFO Moviez India Ltd, which defined suppression as the failure to disclose information with the intent to evade duty. Since the appellant's bona fides in remitting sales tax were not in question, the tribunal found no grounds for alleging suppression. Consequently, the tribunal restricted the demand to the normal period, disallowing the invocation of the extended period of limitation. Penalties under sections 77 and 78 were also set aside, and the appeal was partly allowed, confirming the demand and interest only for the normal period.