2006 (2) TMI 45 - AT - Service Tax

Tribunal upholds service tax on 'Mandap Keeper' services but sets aside penalty under Section 76

The Tribunal upheld the demand for service tax on 'Mandap Keeper' services provided by a Municipal Corporation for letting out venues for various ... Mandap keeper - mandap - taxable service - service tax liability for letting immovable property for organizing social or official functions - penalty under Section 76 - reasonable cause and immunity under Section 80Mandap keeper - mandap - taxable service - service tax liability for letting immovable property for organizing social or official functions - Whether the amounts received by the municipal corporation for letting out halls and stadiums for social and official functions attract service tax under the provision covering services of a 'mandap keeper'. - HELD THAT: - The Tribunal examined the statutory definitions and the admitted facts that the appellants let out halls and stadiums for consideration for organizing sports, Garbas, educational, cultural, religious and official programmes. The definition of 'mandap' includes immovable property let out for consideration for organizing official or social functions, and 'mandap keeper' covers a person who allows temporary occupation of a mandap for consideration. The Tribunal distinguished the decision relied upon by the appellants concerning trade fairs as temporary markets and not ceremonies, holding that those facts were different. On the admitted letting of halls and stadiums for social and official functions, the services fall within the scope of taxable service rendered by a 'mandap keeper' and the demand of service tax was therefore confirmed. [Paras 5, 6]Demand of service tax confirmed in respect of amounts received for letting out halls and stadiums for social and official functions.Penalty under Section 76 - reasonable cause and immunity under Section 80 - Whether penalty imposed under Section 76 should be sustained, having regard to the appellants' bona fide belief and the protection under Section 80. - HELD THAT: - The Commissioner (Appeals) found the appellants to be a statutory government body and that there was no mala fide intention to evade service tax, characterising the lapse as an omission. Section 80 provides that no penalty under the referenced provision shall be imposable if the assessee proves reasonable cause for the failure. The appellants advanced a bona fide belief that, as a municipal statutory body, they were not liable to pay service tax. Applying Section 80, the Tribunal concluded that the appellants had reasonable cause for non-payment and that imposition of penalty under Section 76 was not justified. [Paras 7]Penalty imposed under Section 76 set aside on account of reasonable cause under Section 80.Final Conclusion: Appeal disposed: service tax demand confirmed for letting out halls and stadiums as services of a 'mandap keeper'; penalty under Section 76 set aside as appellants had reasonable cause under Section 80. Issues:- Appeal against demand of Service Tax and penalty under Section 76 of the Finance Act by Municipal Corporation for providing 'Mandap Keeper' services.Analysis:1. The appellants, a Municipal Corporation, provided 'Mandap Keeper' services during 1997-2002 but did not pay the service tax. A show cause notice was issued, demand confirmed, and penalty imposed.2. Appellants argued that they maintained air-conditioned halls and stadiums for various functions without profit motive. They contended that being a municipal corporation, they operated the venues from the amounts received for their use, thus disputing the service tax demand. They cited a Tribunal decision to support their stance.3. The Revenue asserted that service tax was applicable to 'Mandap Keeper' services as per Section 65 of the Finance Act, defining 'Mandap' and 'Mandap Keeper.' They argued that the appellants received substantial consideration for letting out venues for social and official functions, justifying the service tax demand. They distinguished a previous Tribunal decision based on the nature of activities involved.4. The demand was confirmed for letting out stadiums and halls for social and official functions. The appellants did not contest this fact. The definition of 'Mandap Keeper' covered their activities of letting out venues for various functions.5. The Tribunal found no fault in the demand confirmation, noting the difference in circumstances from the cited Tribunal decision. The appellants' venues were let out for consideration for diverse functions, including sports, cultural, and official events, falling under the scope of 'Mandap Keeper' services.6. Regarding the penalty under Section 76 of the Finance Act, the Tribunal considered the appellants' belief as a Statutory Government Body that they were exempt from service tax. Citing Section 80 of the Finance Act, which allows for no penalty if reasonable cause is proven, the Tribunal set aside the penalty due to the appellants' genuine belief, disposing of the appeal accordingly.