2017 (5) TMI 286 - AT - Service Tax

Mandap keeper service - Club or association service - principles of mutuality - Held that - the amounts sought to be taxed for rendering of mandap keeper services includes transactions with members as well as transactions with decorators. The transactions with members provides space in the club premises for conducting functions and programmes - the demand for service tax under the head mandap keeper service is not sustainable in law, following the principles of mutuality. Renting of immovable property service - extended period of limitation - Held that - the confusion and doubts relating to renting of immovable property service would detract from the allegation that there was misrepresentation or suppression of fact with intent to evade tax - invoking of the extended period in relation to renting of immovable property is not justifiable - demand restricted to normal period. Appeal allowed - decided partly in favor of assessee.

Summary

Issues:
1. Tax liability on 'club or association service' to members.
2. Taxability of 'mandap keeper service' and 'renting of immovable property service'.
3. Applicability of mutuality principle in tax cases.

Analysis:
1. The appellant, M/s Maharaj Bagh Club, challenged an order confirming a service tax demand of &8377; 51,29,025/-, with penalties, for providing 'club or association service', 'mandap keeper service', and 'renting of immovable property service'. The Tribunal referred to High Court decisions stating that tax on 'club or association service' to members lacks legal validity due to the mutuality principle. The contention that these decisions are in jeopardy due to a reference to the Supreme Court was rejected, emphasizing that for a service to be taxable, it must be rendered from one person to another. The Tribunal cited previous judgments to support its decision.

2. Regarding the 'mandap keeper service', the appellant argued that transactions with members and decorators do not fall under this category, with decorator payments considered as 'renting of immovable property'. The Tribunal agreed, stating that the demand for tax on 'mandap keeper service' and 'renting of immovable property service' was not sustainable in law. The appellant's admission of tax liability for a specific period was noted, with reliance on a Tribunal decision to address any confusion regarding the taxability of renting immovable property.

3. The Tribunal concluded that the demand for service tax on 'mandap keeper service' was not justifiable, and invoking the extended period for taxing 'renting of immovable property' was unwarranted. As a result, the demand was confirmed only for the portion falling within the normal period, and the appeal was allowed accordingly. The judgment was pronounced on 03/04/2017 by the Tribunal.