Mandap Keeper Service extends to cultural performances in an auditorium; absence of mala fide intent bars extended limitation and penalties.

Renting an auditorium for cultural performances falls within Mandap Keeper Service because the statutory concept of a mandap covers immovable property let out for an official, social or business function, and cultural events such as drama and entertainment are treated as social functions. Service tax liability on that activity was therefore upheld. However, for a statutory or government body, the record did not show mala fide intent to evade tax, so the extended period of limitation was not available. The demand was confined to the normal period, interest remained payable on the recomputed demand, and penalties were set aside.

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Issues: (i) whether renting out an auditorium for cultural performances falls within the scope of Mandap Keeper Service and attracts service tax; (ii) whether the extended period of limitation and penalties were sustainable against a statutory/government body.

Issue (i): Whether renting out an auditorium for cultural performances falls within the scope of Mandap Keeper Service and attracts service tax.

Analysis: The statutory definition of Mandap Keeper Service under Section 65(105)(m) of the Finance Act, 1994, read with the definition of Mandap under Section 65(66) of the same Act, covers use of an immovable property let out for organizing an official, social or business function. The expression "social function" is of wide import. Cultural events such as drama and other entertainments are treated as a subset of social functions. Renting out the auditorium for such events therefore answers the description of Mandap Keeper Service.

Conclusion: The liability to service tax under Mandap Keeper Service was upheld against the assessee.

Issue (ii): Whether the extended period of limitation and penalties were sustainable against a statutory/government body.

Analysis: For a statutory or government body, the record did not support any mala fide intention to evade service tax. The omission was treated as one without fraudulent intent. On that basis, the demand could be sustained only for the normal period of limitation, interest remained payable on the recomputed demand under Section 75 of the Finance Act, 1994, and the penalties imposed under Sections 76, 77 and 78 were not justified, with Section 80 applying to exclude penalty.

Conclusion: The extended period of limitation was rejected and the penalties were set aside; the demand was confined to the normal period.

Final Conclusion: Service tax liability on the activity was affirmed, but the demand was restricted to the normal limitation period and the penalties were annulled, resulting in partial relief to the assessee.

Ratio Decidendi: Cultural performances held in a rented auditorium can fall within "social function" for Mandap Keeper Service, but in the case of a government body the absence of mala fide intention prevents invocation of the extended limitation period and penalties.

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