Saubhagya Tilak Hotels Pvt Ltd Vs Commissioner of Central Excise Raipur (C.G.) (CESTAT Delhi)
CESTAT Delhi held that service tax is leviable on services provided by hotels and restaurant in relation to letting out of halls or rooms for organizing any official, social or business function under ‘mandap keeper’ service.
Facts- The appellant claims that it is engaged in the business of running restaurants and supply of bakery and confectionery items. The Department, however received information that the appellant was providing services falling under “mandap keeper”. The officers visited the premises of the appellant and a panchnama dated December 24, 2011 was drawn in the presence of Satish Kumar Pachori, Manager and two independent witnesses. The statement of Satish Kumar Pachori was also recorded on December 22, 2011. He stated that appellant provides services in relation to birthday parties, kitty parties and marriage parties and has the ability to arrange parties for a group comprising between 700 to 800 people and for this purpose an advance of Rs.10000/- to Rs.25000/- is taken. He also stated that the frequency of such bookings is 8 to 10 per month.
A show cause notice was, thereafter, issued calling upon the appellant to show cause as to why service tax on “mandap keeper” service provided by the appellant during 2008-2009 to 2011-2012 should not be recovered with interest and penalty.
Commissioner confirmed the demand with interest and penalty.
Conclusion- A Circular dated 23.08.2007 issued by the Central Board of Excise and Customs clarifies that halls or rooms let out by hotels/restaurant for a consideration for organizing any official, social or business function would be covered under the definition of ‘mandap‟ and such hotels and restaurant would be covered within the scope of ‘mandap keeper’. Accordingly, service tax would be leviable on services provided by hotels and restaurant in relation to letting out of halls or rooms for organizing any official, social or business function.
FULL TEXT OF THE CESTAT DELHI ORDER
The order dated January 20, 2015 passed by the Commissioner confirming the demand of service tax under “mandap keeper” service, as defined under section 65(67) of the Finance Act, 19441 and made taxable under section 65(105) (m) of the Finance Act, with penalty and interest has been assailed in this appeal.
2. The appellant claims that it is engaged in the business of running restaurants and supply of bakery and confectionery items. The Department, however received information that the appellant was providing services falling under “mandap keeper” and therefore, required the appellant to furnish details of the services rendered and the amount received during the period from 2006-2007 to 2007-2011. The appellant did not respond to the letter and therefore, the officers visited the premises of the appellant and a panchnama dated December 24, 2011 was drawn in the presence of Satish Kumar Pachori, Manager and two independent witnesses. The statement of Satish Kumar Pachori was also recorded on December 22, 2011. He stated that appellant provides services in relation to birthday parties, kitty parties and marriage parties and has the ability to arrange parties for a group comprising between 700 to 800 people and for this purpose an advance of Rs.10000/- to Rs.25000/- is taken. He also stated that the frequency of such bookings is 8 to 10 per month.
3. A show cause notice dated April 16, 2013 was, thereafter, issued to the appellant and the relevant portions of the show cause notice are reproduced below:
“3. Upon scrutiny of the records viz. daily receipt and expenditure sheet, payment vouchers, etc., it is observed that the Noticee have commenced their business operation during the financial year 2008-2009 onward and they have received huge amount from various clients in „Cash‟ as well as by „Cheque‟. The details of the amount realised by them from their clients during the period from 2008-2009 to 2010-2011 (Annexure-J1 to J4) are as under:-
