Service tax liability confirmed for mandap-keeper providing comprehensive facilities beyond venue rental under normal limitation period

CESTAT Chennai held that appellant was liable for service tax under mandap-keeper service as they provided comprehensive facilities including food, beverages, lights, fans, and staff services beyond mere venue rental. The tribunal confirmed the service tax demand but limited it to normal limitation period, rejecting extended period as no suppression of facts was established since appellant had paid sales tax in good faith. Interest under Section 75 was restricted to normal period, and penalties under Sections 77 and 78 were set aside. Appeal was partially allowed.

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Issues Involved:

1. Liability of the appellant under 'Mandap-Keeper' Service.
2. Invocation of extended period of limitation for fastening the service tax liability under the above service.

Issue-wise Detailed Analysis:

1. Liability of the appellant under 'Mandap-Keeper' Service:

The primary issue in this appeal revolves around whether the appellant's services fall under the 'Mandap-Keeper' category, thereby attracting service tax liability. The appellant operates a hotel providing banquet halls for large gatherings, which are used primarily for catering services. The appellant contended that the use of banquet halls was ancillary to the catering services, and since they collected sales tax on food charges, service tax should not apply. However, the tribunal referred to the definitions in Section 65 of the Finance Act, 1994, which describe a 'Mandap' as any immovable property let out for organizing functions and a 'Mandap-Keeper' as one who allows temporary occupation of such premises for a consideration. The tribunal also relied on the Supreme Court's decision in Tamil Nadu Kalyana Mandapam Association Vs. Union of India, which clarified that the provision of premises for events, with or without additional services, constitutes a service under the 'Mandap-Keeper' category. Thus, the tribunal concluded that the appellant's activities indeed fall under the 'Mandap-Keeper' service, making them liable for service tax.

2. Invocation of extended period of limitation:

The second issue concerns whether the extended period of limitation could be invoked for demanding service tax from the appellant. The original authority alleged suppression of facts by the appellant, as they did not declare the gross value of service income in their statutory returns, thereby evading service tax. However, the appellant argued that they acted under a bona fide belief that only sales tax was applicable, as they considered their services to involve only the sale of food. The tribunal noted that the appellant consistently collected and remitted sales tax, and there was no evidence of intent to evade service tax. The tribunal referenced the Supreme Court's decision in Commissioner of Service Tax, Mumbai Vs. M/s. UFO Moviez India Ltd, which defined suppression as the failure to disclose information with the intent to evade duty. Since the appellant's bona fides in remitting sales tax were not in question, the tribunal found no grounds for alleging suppression. Consequently, the tribunal restricted the demand to the normal period, disallowing the invocation of the extended period of limitation. Penalties under sections 77 and 78 were also set aside, and the appeal was partly allowed, confirming the demand and interest only for the normal period.

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