2015 (4) TMI 219 - AT - Service Tax

Business Auxiliary Services - Mandap Keeper service - Commission agent service - Held that - Commission Agent must act on behalf of another person for provision of service. In his order, Commissioner (Appeals) has simply reproduced the definition of Commission Agent and not explained as to why this definition is applicable in the present case. He has not established that the appellant while acting as a Commission Agent was actually acting on behalf of the decorator for providing or receiving service. The appellant himself is providing the services of Mandap Keeper independently to his clients. And the decorator provides the service of decoration to some clients. The two services are independent of each other. The appellant is not acting on behalf of the decorator to provide service to his clients, nor is he acting on behalf of the decorator to provide service to the decorator. Therefore, the activity of the appellant is not that of the Commission Agent falling under the definition of Business Auxiliary Services. When the Mandap Keeper accords monopoly right of a caterer for providing catering or decorator service to client who hired the Mandap Keepers premises, no services are provided to the hirer by the Mandap Keeper and service is only provided to the hirer by the decorator. The conclusion arrived at by the Commissioner (Appeals) is not based on any reasoning with reference to the definition of Commission Agent and the definition of Business Auxiliary Services, and is rejected. We set aside the demand duty. Consequently, the question of imposing interest and penalty does not arise. - Decided against Revenue.

Summary

Issues involved:
1. Service Tax demand confirmation with penalty under Section 78 and refraining from imposing penalty under Section 76.
2. Challenge against Service Tax payment for a Mandap Keeper leasing out premises for functions.

Analysis:
1. The first issue revolves around the confirmation of Service Tax demand of Rs. 8,26,080 along with interest and penalty under Section 78, while refraining from imposing penalty under Section 76. The Revenue filed an appeal contending that penalty under Section 76 should also be applicable. The second appeal challenged the same Order-in-Appeal asserting that Service Tax is not payable.

2. The second issue concerns a Mandap Keeper leasing out premises for ceremonial functions like marriages. The appellant received booking advances and donations for decoration tenders during 2004-05 to 2006-07. The Commissioner (Appeals) deemed the donations as consideration received as a Commission Agent, providing Business Auxiliary Services. Consequently, a Service Tax of Rs. 1,82,550 was deemed payable along with interest and equivalent penalty under Section 78.

3. The Revenue argued that the appellant, by granting a decorator a monopoly right for catering and decoration services, was providing services falling under Business Auxiliary Services. However, the appellant contended that they were not acting as a Commission Agent and were solely providing Mandap Keeper services, subject to Service Tax. The Commissioner (Appeals) did not address a relevant judgment by the Hon'ble Bombay High Court.

4. Upon analysis, it was found that the appellant was not acting as a Commission Agent as defined under Business Auxiliary Services. The appellant independently provided Mandap Keeper services, distinct from the decorator's services. Referring to the CKP Mandal case, it was established that when a Mandap Keeper grants a caterer monopoly rights, services are provided solely by the caterer, not the Mandap Keeper. Consequently, the demand duty was set aside, negating the need for interest and penalty imposition.

5. In conclusion, the appellant's appeal was allowed with relief, while the Revenue's appeal was dismissed. The Cross objection was also disposed of accordingly.