2006 (2) TMI 45 - AT - Service Tax

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

SURAT MUNICIPAL CORPN. Versus COMMISSIONER OF C. EX., SURAT

The Tribunal upheld the demand for service tax on 'Mandap Keeper' services provided by a Municipal Corporation for letting out venues for various ... Service Tax - Mandap keeper - Appellants let out halls and stadiums for various social and official functions, they were under bona fide belief that they are not liable to pay service tax being a Statutory Government body - Penalty not imposable 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.