In a major relief to the Saubhagya Tilak Hotels Pvt Ltd, the New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), confirmed the demand of service tax on mandap keeper service.
The order dated passed by the Commissioner confirming the demand of service tax under “mandap keeper” service, as defined under section 65(67) of the Finance Act, 1944 and made taxable under section 65(105) (m) of the Finance Act, with penalty and interest has been assailed in the present appeal.
The show cause notice, therefore, called upon the appellant to show cause as to why service tax of Rs.91 lakhs on “mandap keeper” service provided by the appellant during 2008-2009 to 2011- 2012 should not be recovered with interest and penalty.
The appellant filed a reply to the show cause notice and stated that it did not book any space for organizing parties. In fact, the appellant only booked tables for the clients/customers for providing restaurant service, irrespective of whether the clients/customers booked the tables for birthday or kitty party. The appellant also stated that it had not let out any room to guests.
The authorized representative appearing for the Department, however, supported the impugned order and submitted that the demand has correctly been confirmed under “mandap keeper” service.
A “mandap keeper” is, a person who allows temporary occupation of a mandap for a consideration for organizing any official, social or business function. “Mandap” means any immovable property. Any service is provided or to be provided to any person by a mandap keeper in relation to the use of mandap in any manner would be taxable under section 65(105)(m) of the Finance Act.
The Tribunal of Justice Dilip Gupta, President and Hemambika R Priya, Technical Member observed that “It is clearly a case where the appellant had suppressed material facts on the department in order to evade payment of service tax and, therefore, the extended period of limitation was correctly invoked under the proviso to section 73(1) of the Finance Act.”
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