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RAJASTHAN HIGH COURT (JAIPUR BENCH)
K.S. Jhaveri, Vijay Kumar Vyas, JJ.
Commissioner Of Central Excise, Jaipur-I - Appellant
Versus
Rambagh Palace Hotels Pvt. Ltd. - Respondent
Central Excise Appeal No. 20 of 2012
Decided On : 08-11-2017
SERVICE TAX - MANDAP KEEPER SERVICES - RENTING OF ROOMS - Whether rooms provided by the appellant even for temporary stay to the customers for organizing marriage conference and meetings is covered under definition of Mandap keeper.
Fact of the Case:
The appellant, a hotel, provided banquet halls, gardens, and rooms for various functions, including marriages, conferences, and meetings. The issue arose as to whether the room rent charges collected by the appellant were subject to service tax under the category of Mandap Keeper Services.
Finding of the Court:
The court held that the rooms provided by the appellant for temporary stay to customers organizing functions were covered under the definition of Mandap Keeper Services. Therefore, the gross amount charged for the services, including room rent, was subject to service tax.
Issues: Whether the rooms provided by the appellant for temporary stay to the customers for organizing marriage conference and meetings is covered under definition of Mandap keeper.
Ratio Decidendi: The court interpreted the definition of Mandap Keeper Services under the Finance Act, 1994, which includes any immovable property let out for consideration for organizing any official, social, or business function. The court held that the rooms provided by the appellant, even for temporary stay, were an integral part of the Mandap Keeper Services and were, therefore, subject to service tax.
Final Decision: The court dismissed the appeal filed by the appellant, upholding the demand for service tax on the room rent charges collected by the appellant.
JUDGMENT
ORDER
K.S. Jhaveri, J. - By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has partly allowed the appeal of the assessee.
2. This Court while admitting this appeal on 30-1-2013, framed following substantial question of law :
"Whether the Tribunal is correct in holding that no Service Tax is leviable/payable on the charges collected in the name of booking of the Rooms which were integrally used in connection with the functions organized by the organizers in the adjacent gardens/and the payment for the entire premises was made by the organizers under a composite contract whereas the Service Tax is leviable on the gross amount charged from the customers under the category of Mandap Keeper services in terms of the provisions of Section 67 of the Act, 1994?
3. Counsel for the appellant has taken us to the order of the first authority where pursuant to the notice issued by the authority after considering the definition, it has observed as under :-
"5.4 The issue before me for decision are that (i) whether the charges of room charged from the clients who entered under composite contract for holding/organizing the functions of marriage, conference and meetings are includible in the gross amount in terms of the Section 67 of the Finance Act, 1994 and leviable to Service Tax under the provisions of Sections 66 and 68 of the Finance Act, 1994; (ii) if so, whether the same is recoverable under proviso to Section 73(1) of the Act and also whether the assessee is liable for penal action under Sections 76 and 78 of the Finance Act, 1994.
5.5 To begin with, the legal provisions and the clarification issued by the Board need to be pondered upon, being the basis of the issuance of the subject notice :-
(i) As per Section 65(66) of the Finance Act, 1994 Mandap means any immovable property as defined under Section 3 of the Transfer of Property Act, 1982 (4 of 1982) and includes any furniture, fixtures, light fittings and floor coverings therein let out for a consideration for organizing any official, social or business function.
[Explanation - For the purpose of this clause, social function includes marriage.]
(ii) Further, as Section 65(67) of the Finance Act, 1994, Mandap Keeper means a person who allow temporary occupation of a Mandap for a consideration for organizing any official, social or business function.
[Explanation - For the purposes of this clause, social function includes marriage.]
(iii) The taxable service for Mandap Keeper service has been defined under Section 65(105)(m) means any service provided or to be provided to any person, by a Mandap Keeper in relation to the use of a mandap in any manner including the facilities provided or to be provided to such person in relation to such use and also services, if any, provided or to be provided as a caterer.
(iv) As per Section 67(1) of the Finance Act, 1994, where Service Tax is chargeable on any taxable service with reference to its value, then such value shall, -
(i) in a case where the provisions of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him;
(ii) in a case where the provision of service is for a consideration not wholly or partially consisting of money, be such amount in money as, with the addition of Service Tax charged, is equivalent to consideration;
(iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner.
(v) Further, Section 67(3) of the Finance Act, 1994 stipulated that the gross amount charged for taxable service shall include any amount received towards the taxable service before, during or after provision of such service.
(vi) Sub-rule (1) of Rule 5 of the Service Tax (Determination of Value) Rules, 2006 provides that where certain expenditure or cost are incurred by the service provider in the course o
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