By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Whether supply of food along with provision of Mandap keeper services is liable to service tax under Mandap keeper services?
Facts:
The appellants provided “Mandap Keeper Service” and ‘Catering Services’. Prior to April, 2005, the appellants were charging one lump sum amount and service tax was levied on combined receipt. With effect from April, 2005, the appellants started splitting the bills, one for banquet hall and another for supply of food and discharged service tax only on banquet hall charges considering the same to be Mandap keeper services. Objecting to splitting of bill, the department confirmed demand on food charges collected as well. The appellants contested that food charges were collected separately on which VAT was levied. Since the transaction was of sale of goods, the same was not leviable to service tax. They further contested that Joint Commissioner of Central Excise of their other unit had accepted their contention and service tax was levied only on hall charges. Accordingly, since department had knowledge of the activity undertaken by the appellants, extended period of limitation also was challenged. The appellants further challenged some calculation errors of the department. On the other hand, relying on the decision of Hon’ble Supreme Court in case of Kalyana Mandapam Assn. vs. Union of India 2006 (3) STR 260 (SC) and Sayaji Hotels Ltd. 2011 (24) STR 177 (Tri.-Del.), the department contested that catering charges were includible in taxable value of Mandap keeper services and contended that though in another unit, the case was dropped, a wrong decision could be perpetuated.
Held:
Having regard to the decision of Hon’ble Apex Court in Tamil Nadu Kalyana Mandapam Assn. (supra) and Sayaji Hotels Ltd. (supra), the services rendered by Mandap keepers as caterer were also liable to service tax under the category of Mandap keeper services since price charged for food formed part of consideration of Mandap keeper’s services. Service tax demand beyond 5 years was quashed. Since every registered premise is considered as a separate assessee under service tax law, dropping of demand at one unit was of no relevance to decide whether extended period of limitation may be invoked or not. The appellants cannot take plea of bona fide belief as Hon’ble Supreme Court has clearly held catering services were liable to service tax. Also, according to the Apex Court’s judgement in the case of Fuljit Kaur and Chandigarh Administration 2010 (262) ELT 40 (SC) if a wrong decision has been passed at a judicial forum, others cannot invoke the jurisdiction of the superior court for repeating the same irregularity. In the present case, the appellants did not disclose consideration received from catering services in bills and ST3 Returns. Hence, it was a case of mis-statement of fact with intent to evade taxes and extended period of time was justified. In light of the above analysis, the matter was remanded back for re-quantification. Penalty u/s. 76 was held imposable for default in payment of service tax since mens rea was not required to be proved to levy such penalty. In view of contravention of provisions in the present case, penalties u/s. 77 were sustainable. Splitting of bills from April, 2005 was a deliberate act to evade Service tax payments and therefore, penalty u/s. 78 was confirmed.
