CESTAT Upheld Service Tax Demand for Mandap Keeper & Business Auxiliary Services

The Appellate Tribunal CESTAT, Ahmedabad confirmed a service tax demand of Rs. 1,83,799 against the appellant for short payment of service tax related to mandap keeper services and commission received for business auxiliary services. Penalties under Section 76 and Section 78 of the Finance Act, 1994 were imposed despite the appellant's arguments for penalty reduction and against the imposition of penalties under both sections. The Tribunal held that statutory payment timelines could not be condoned, leading to the affirmation of penalties on 24-12-2010.

---

---

Issues:
1. Short payment of service tax by the appellant for providing mandap keeper service.
2. Commission received by the appellant for business auxiliary services.
3. Imposition of penalties under Section 76 and Section 78 of the Finance Act, 1994.

Issue 1: Short payment of service tax for providing mandap keeper service
The appellant was found to be renting a party plot and charging customers for functions, leading to a shortfall in service tax payment of Rs. 1,43,300 from 2002-2003 to 2006-2007. Additionally, the appellant received commission from decorators, which was deemed as business auxiliary services, resulting in a service tax liability of Rs. 40,499 for the period from 1-7-03 to 31-3-07. After adjudication, a service tax demand of Rs. 1,83,799 was confirmed along with penalties under Section 76 and Section 78 of the Finance Act, 1994.

Issue 2: Commission received by the appellant for business auxiliary services
The appellant did not contest the service tax demand and interest but sought a reduction in penalties. The appellant requested a penalty reduction to 25% under Section 78, which was already paid, and the setting aside of the penalty under Section 76. However, it was noted that the penalty was not paid within thirty days of the order issuance, despite the original authority's indication of a reduced penalty if paid promptly. The appellant's delay in payment was attributed to receiving the order late due to the party plot's irregular use, but the Tribunal held that statutory payment timelines could not be condoned.

Issue 3: Imposition of penalties under Section 76 and Section 78
Regarding the penalty under Section 76, the appellant argued against the imposition of penalties under both sections, citing a High Court decision that penalties for distinct offenses must be imposed separately. As no reasonable cause under Section 80 of the Finance Act, 1994 was shown, the Tribunal rejected the appeal, upholding the penalties under both Section 76 and Section 78. The judgment was pronounced on 24-12-2010 by the Appellate Tribunal CESTAT, Ahmedabad.

---