No service tax on rental charges for trade fair and exhibition space; lessor not a mandap keeper, demands invalid

CESTAT dismissed the Revenue's appeal and upheld the Commissioner (Appeals) order holding no service tax on rental charges for trade fair/exhibition space. The Tribunal followed its prior ruling that rental receipts for business activities do not attract service tax and that the lessor was not a "mandap keeper" within the statutory definition, since the premises were used for business activities rather than functions. Accordingly, demand, interest and penalties were not maintainable and the Revenue's appeal was rejected.

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Issues: Whether service tax is leviable on rental charges received for use of space by the assessee (organiser of trade fairs/exhibitions), i.e., whether the assessee is a "mandap keeper" within the meaning of Section 65(67) of the Finance Act, 1994.

Analysis: The statutory definition in Section 65(67) identifies a "mandap keeper" as one who allows temporary occupation of mandap for consideration for organising any official, social or business function. The Tribunal's precedent in India Trade Promotion Organisation v. CCE, Delhi distinguishes between a "function" and an "activity", holding that rental of premises for organising business activity (such as trade fairs/exhibitions) does not constitute organising a business function. The levy under Sections 73 and 75 applies only where the renting falls within the scope of providing premises for organising an official, social or business function as defined. The facts show the premises were rented for trade fair/exhibition business activity, not for organising a business function; therefore the statutory definition is not attracted and the service does is not taxable as mandap-keeping under Clause 67.

Conclusion: Service tax is not leviable on the rental charges received by the assessee because the renting was for organising business activity (trade fair/exhibition) and not for organising an official, social or business function; the assessee is not a "mandap keeper" under Section 65(67) of the Finance Act, 1994. The decision is in favour of the assessee.

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