Customs, Excise and Gold Tribunal - Bangalore
The Secretary, Town Hall Committee ... vs The Commissioner Of Central Excise on 29 June, 2007
Equivalent citations: 2007[8]S.T.R.170, [2007]10STT434
ORDER T.K. Jayaraman, Member (T)
1. These appeals have been filed against the following Orders-in-Appeal both passed by the Commissioner of Central Excise (Appeals), Mangalore:
(1)299/2005-CE dated 23.11.2005 (2)303/2005- CE dated 24.11.2005
2. The first appellant is the Mysore City Corporation. They let out the Town Hall of the Corporation for cultural functions and organising of Political events. The second appellant is Kalamandir, Deptt. of Kannada & Culture, Government of Karnataka. They have a hall named 'Kalamandir' for organising various functions, events and activities on temporary basis. Revenue proceeded against both the appellants for non-payment of Service Tax under the category of 'Mandap Keeper'. The appellants were aggrieved over the order of the lower authority and approached the Commissioner(Appeals) The Commissioner(Appeals) passed the impugned orders upholding the orders of the original authority. Aggrieved over the order of the Commissioner (Appeals), the appellants have come before this Tribunal for relief.
3. The learned Counsel Shri K. Parameswaran urged the following points:
(i) He took us to the definition of 'Mandap Keepers' and urged that while deciding the leviability to Service Tax, the said definition, which limits the use of Mandap for organizing any official, social, business functions should be kept in mind. If the Mandap is given for dance, drama, music programmes, the same cannot be considered as social functions. He emphasised a point that in a social function, there should be mingling of known people and it cannot be stretched beyond the said meaning given therein. It should be prima facie, something in the form of a social gathering like marriage, naming ceremony arranged by the known group of people who mingle with each other. He referred to the explanation inserted in the Finance Act w.e.f. 11.05.2007 according to which 'social function' includes 'marriage'. He stated that the Town Hall is given on rent for the following purposes:
- Social drama and school functions
- Mythological/Historical drama or Night programmes
- Clubs/Associations & other commercial programmes
- Public function
- Kannada Film Shooting
(ii) He referred to the decision of this Bench in the case of ADA Rangamandira Trust v. CCE, Bangalore-III 2007 (79) RLT 500(CESTAT-Bang.) and said that the same is not binding and clearly distinguishable since the said decision has been rendered in a situation when the term 'social function' was not clarified by any explanation inserted in the Act itself and hence in the present context the same would be no longer a good law. The decision in the ADA Rangamandira Trust case has not considered the other activities (as distinct from functions like dance, drama, film shooting etc.) as not falling within the purview of social function for levy of Service Tax under the category of Mandap keeper.
(iii) In respect of appeal ST/44/2006, the period of demand is from 01.04.2000 to 31.08.2004 as suppression, will full intention have not been established and the Show Cause Notice has been issued only on 08.04.2005. The extended period cannot be invoked. Therefore, major portion of the demand would be hit by time bar. Even otherwise there was a bondafide belief and thus for this reason also, the major portion of the demands would be barred by limitation. The Board's Circular dated 29.04.1997 clarifying that dance, drama or music programme etc. are part of culture and would get covered under the purview of social function for levy of Service Tax can be challenged by an assessee and further being contrary to the statutory provisions, the Circular cannot expand the scope in any manner. It was also pointed out that the Tribunal Mumbai Bench, in the case of The Social Service League v. CCE, Mumbai 2006 (74) RLT 96(CESTAT-Mum.) has held that renting out a hall for Drama performances is not covered under the levy of Service Tax as Mandap Keeper.
(iv) With regard to Kalamandir, he said that it is an establishment of Govt. of Karnataka under the Administrative control of Deptt. of Kannada & Culture. The appellant was under the bonafide belief that the letting out the premises for conducting cultural activities for promotion of Kannada and Culture is not in the nature of any taxable service and thus had not collected any amount towards Service Tax from the occupants of the said premises.
(v) The Kalamandir cannot be said to have been let out for organizing any official, social or business functions. The word 'function' has been used just to mean ceremonies and it cannot be taken to mean that it would include all activities which are in the nature of promoting culture, language like Kannada language, dance, drama etc. The scope of the term 'social function' can be only such functions where there is a get together of individuals (whether relatives, friends or others) like a birthday party, marriage, house warming ceremony, kitty party, etc. The term 'social' has been defined in Standard Dictionaries to mean 'involving allies or confederates marked by or passed in pleasant companionship with one's friends or associates'. Thus, when it is not involving pleasant companionship with friends, such an event or an activity can never be considered as falling within the scope of social function.
(vi) The activity of organizing music or cultural programme can never be considered to fall within the purview of social functions.
(vii) A categorical distinction is required to be made between a 'cultural event' and a 'social function' and the same cannot be mixed up with each other.
(viii) No justification has been given for invoking the longer period and demanding the tax.
4. The learned JDR reiterated the impugned orders and also this Bench's decision in the case of ADA Rangamandira Trust(cited supra).
5. We have gone through the records of the case carefully. The first appellant rents out the Town Hall for the following purposes:
- Social drama and school functions
- Mythological/Historical drama or Night programmes
- Clubs/Associations & other commercial programmes
- Public function
- Kannada Film Shooting As regards the second appellant, the Kalamandir is hired out for cultural programmes like dance, drama and promotion of Kannada language. The learned Advocate vehemently argued that there is a distinction between 'cultural event' and 'social function'. According to him, in social functions, there is a meeting of known people. He has given the examples of marriage, house warming ceremony, kitty party, birthday party, etc. He has also referred to the Explanation inserted in the Finance Act. The Explanation reads as follows:
Explanation: For the purpose of this clause, 'social function' includes 'marriage.' The learned Advocate has come to the conclusion that social function, as far as the Finance Act 2007 is concerned, means only marriage and similar functions. We are afraid that the above conclusion is not correct. The explanation says that social function includes marriage. Since it is an inclusive definition, social function is not restricted to marriage alone. Therefore, to say that in view of this explanation, this Bench's decision in the case of ADA Randamandira is no longer good law, is not correct. The explanation inserted on 11.05.2007 cannot nullify the reasoning adopted in the ADA Randamandira decision.
5.1. Let us reproduce the definition of "Mandap keeper".
'Mandap Keeper' means a person who allows temporary occupation of a mandap for consideration for organising any official, social or business function.
5.2. In the present appeals, the point at issue is whether the services rendered by the appellants come under the category of 'Mandap Keeper' as per Section 65 of the Finance Act, 1994. The dispute narrows down to the interpretation of the term 'social function' used in the definition of 'Mandap keeper'. A mandap can have various uses. We appreciate the argument of the learned Advocate that for bringing the services of Mandap Keeper into the Service Tax net, the purpose for which the Mandap has been given on rent is to be examined. A mandap may be given on rent for selling certain items or for an exhibition. By no stretch of imagination, these activities can come within the purview of official, social or business functions. Therefore, it is very necessary to examine the purpose for which the mandap is given on rent. In such circumstances, each case has to be examined on the basis of the facts at hand and it may not be correct to generalize. We have already enumerated in the present appeals, the purposes for which the Town Hall/Kalamandir are given on rent. The learned Advocate makes a fine distinction between 'cultural event' and 'social function'. According to him, organizing a dance or drama cannot be called as organizing a social function. In his view, the meaning of social function cannot be stretched to include what the legislature has not intended. In the Rangamandira decision, relying on the Board's clarification of 1997, we held that programmes of dance, drama and music are social functions. According to the Oxford Advanced Learners Dictionary, 'function' means 'a social event or official ceremony'. The term 'social function' is very comprehensive. Cultural events are only a subset of social functions. In our view, any cultural event would also be considered as a social function. In a social function like dance or drama, many people attend for watching the programme. We cannot say that there is no meeting of minds. The learned Advocate wants to restrict the scope of function only to certain ceremonies like marriage. We are afraid that there is no justifiable reason for limiting the scope of the term 'social function' in such a manner. The appellants hired the Mandap for cultural functions only on commercial consideration. The explanation inserted includes marriage as a social function for the purpose of levy of Service Tax on the Mandap Keepers. It does not mean that if the mandap is hired for other purposes there would not be any levy of Service Tax. The Board, In its Circular of 1997, has clearly brought out the reasons for considering dance, drama, music etc. as social functions. The term 'social' means relating to a group of people or society. In all cultural functions, society is involved. We can do no better than reproduce Board's clarification with which we are in agreement.
Query: Whether service tax is attracted in cases where premises and/or connected facilities are let out on rent to clubs and cultural organisations for the purposes of holding programmes relating to Dance, Drama & Music?
Clarification: The answer lies in the affirmative. The contention that holding a dance, drama or music programme it is not a special function is not tenable. Culture is an inalienable element of a civilised society and is an integral part of our social ethos and is infact a form of social intercourse. Programmes of dance, drama and music are social function. In case rental is being charged by the owner or caretaker of any premises for holding such functions, they are liable to pay service tax. Apparently, such renting out of premises is for a monetary consideration and thus has a pecuniary aspect. In case no charges/rental is being paid i.e. the premises are given out free of cost to hold such function, there would be no service tax liability.
5.3. As regards Kannada film shooting and political meetings, it is very clear that they cannot be considered as social functions. Therefore, such instances have to be excluded from the levy of Service Tax in the category of Mandap Keepers.
5.4. Both the appellants have urged that the invocation of longer period is not justified, as they were under the bonafide impression that their activities would not come within the purview of Service Tax under the category of Mandap Keeper. We are in agreement with the contention of the appellants. Therefore, the demand will be restricted to the normal period. As the issue involves question of interpretation of law, no penalty is warranted. We set aside the penalties. The appeals are allowed partially in the above terms. We uphold the levy of Service Tax on the appellants. However, the demand will be restricted to the normal period.
(Pronounced in open Court on 27 JUN 2007)