Customs, Excise and Gold Tribunal - Bangalore
Ada Rangamandira Trust vs The Commissioner Of Central Excise on 28 November, 2006
Equivalent citations: [2007]9STJ35(CESTAT-BANGALORE), [2007]8STT206, (2007)9VST465(CESTAT-BLORE)
ORDER T.K. Jayaraman, Member (T)
1. This appeal has been filed against the OIA No. 99/2004 dated 1.9.2004 passed by the Commissioner of Central Excise (Appeals-II), Bangalore.
2. The Headquarters, Preventive Unit, Bangalore-III, on the basis of intelligence, conducted certain investigations regarding the appellants for the period from 1.2.1998 to 30.06.2002. It was found that the appellant, who were letting out their hall for organizing social/cultural functions were liable to pay Service Tax under the category of Mandap Keeper. Show Cause Notice was issued for demand of Service Tax for the above mentioned period. Interest under Section 75 of the Finance Act, 1974 was demanded. Penalties under various sections were proposed. The Adjudicating Authority confirmed the Service Tax demand of Rs. 2,09,943/- under Section 73 of the Act. He confirmed the interest also. He imposed the following penalties.
(i) Rs. 500/- under Section 75A- for failure to take registration;
(ii) Rs. 2,09,943/- under Section 76 for failure to make payment of Service Tax;
(iii) Rs. 1000/- under Section 77 for failure to file the prescribed returns; and
(iv) Rs. 2,09,943/- under Section 78 for failure to pay Service Tax.
The appellants appealed to the Commissioner (Appeals). The Commissioner (Appeals) held that the appellants are covered under the ambit of the service of Mandap Keeper and are liable for payment of Service Tax demanded by the lower authority. Hence, he upheld the OIO. The appellants are highly aggrieved over the impugned order. Hence, they have come before this Tribunal for relief.
3. Shri M.A. Narayana, the learned Consultant/appeared for the appellants and Shri K. Sambi Reddy, the learned JDR, for the Revenue.
4. The learned Consultant urged the following submissions:-(i) The appellant is known as Amateur Dramatic Association. It is a Trust primarily floated to promote the cultural activities of the citizen. The Association has built a Theatre by name "A.D.A. RANGAMANDIRA" in 1990. The Theatre is primarily designed for staging dramas, holding music or dance concerts with suitable acoustic and lighting equipments. The theatre is offered on rental basis to amateur or professional dramatis and other artists. Sometimes, the theatre is used for religious discourses/seminars. On some occasions, the theatre is also used for Annual Day functions by Schools, colleges, etc.
(ii) The crucial word in the context of levy of Service Tax on the Mandap Keepers is 'function' which implies a ceremony as held by the Northern Bench of the Tribunal in the case of India Trade Promotion Organisation v. CCE, New Delhi . The lower authority has erred in holding a cultural activity as a social function by deriving an equation between the words 'social' and 'cultural'.
(iii) What is applicable to the facts and circumstances of this case is Board's Circular No. 42/5/2002-ST dated 29.04.2002 and not the Circular No. F.332/82/97-TRU dated 24.09.1997.
(iv) The appellants produced copies of the affidavits of some of the appellant's patrons that clearly proved the fact that the theater was not being used by them for any ceremony. The burden is on the department to prove the taxability of the service and it is not on the appellant to prove the non-taxability.
(v) The appellant had a reasonable cause emanating from a bonafide belief and understanding of an ordinary prudent person in not complying with the provisions of Sections 76, 77, 78 and 79 of the Finance Act, 1994. Thus, both the learned lower authorities have erred in not considering the appellant's request to invoke the provisions of Section 80 of the Finance Act, 1994.
(vi) The learned Advocate, in the course of hearing before the Tribunal, urged that the entire amount collected by them cannot be subjected to Service Tax and the rent collected actually can be bifurcated into two categories - one non-taxable and the other taxable. The lower authorities have failed to consider this point.
(vii) The learned Advocate strongly urged that dance programmes cannot be equated with social function and no service tax is leviable when the theater is rented for dance programmes.
(viii) The appellants were under a bonafide belief that they were not liable to pay any service tax since they were letting out the theatre only for cultural activities. The CBEC has clarified way back in 1997 itself that dance, drama or music or social functions and renting out of any premises for such activities would amount to taxable service. In spite of this clarification, the department did not initiate any action till as late as November, 2002 even in respect of similarly placed service provider whose services the department itself had availed during 1998-99, 1999-2000 while celebrating the Central Excise Day. This clearly shows that the appellants' understanding of the issue is no different from that of the departmental officers. In these circumstances, penalty is not imposable. Since the appellant had a reasonable cause which resulted in the failure on the part of the appellant in filing the returns, this is a right case where the provisions of Section 80 of the Act is invocable.
(ix) The learned Advocate relied on the following case-laws:
(a) India Trade Promotion Organisation v. CCE, Delhi-I 2004 (164) ELT 163 (Tri.-Del.)
(b) Social Service League v. CCE, Mumbai 2006 (2) STR 207 (Tri.-Mumbai)
(c) Karbala Trust v. CCE, Trivandrum 2006 (2) STR 339 (Tri.-Bang.)
(d) CCE, Mangalore v. Krishnapur Mutt 2006 (3) STR 144 (Tri.-Bang.)
(e) Secy., Town Hall Committee, Mysore City Corporation v. CCE, Mysore 2006 (4) STR 78 (Tri.-Bang.)
(f) Board's Circular No. 42/5/2002-ST dated 29.04.2002
5. The learned JDR invited the Bench's attention to the following Circulars of the Board wherein it has been clearly stated that letting out on rent for holding programmes relating to dance, drama and music is a taxable service.
(i) 332/82/97-TRU dated 24.09.1997
(ii) The Hon'ble Supreme Court, in Tamil Nadu Kalyana Mandapam Association v. UOI , has held that taxable services could include mere providing of premises on a temporary basis for organizing any official/social or business functions.
(iii) CCE, Mumbai-IV v. CKP Mandal
(iv) In RE: Muslim Educational Association of Southern India 2004 (174) ELT 285 (Commr. Appl.)
(v) CCE, Vadodara v. Dhiren Chemical Industris wherein it is held that CBEC Circular is binding on Revenue.
6. We have gone through the records of the case carefully. The main contention of the appellant is that they are letting out the premises only for cultural purposes like dance, drama, music etc. and these activities would not come within the ambit of social functions. In this connection, they have relied on the Tribunal's decision in the case of Social Service League (cited supra). In the said decision, it is held that drama performances being conducted in the hall/mandap cannot be covered under the levy of Service Tax as Mandap Keeper.
The said order of the Tribunal has not given the detailed reasons for holding such a view. However, the Hon'ble Apex Court, in the Tamil Nadu Kalyana Mandapam case cited supra, has held that taxable services could include mere providing of premises on a temporary basis for organizing any official, social or business functions. The Board, in its Circular dated 1997, cited supra, has actually clarified this point with reference to the following query:
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 of 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.
Further, in the Circular of 2002 relied on even by the learned Advocate, we find that the same is in fact in favour of Revenue. The Circular dated 29.4.2002 refers in para 3 to the clarification of 1997 regarding letting out of a hall for dance, drama music etc. From the above Circulars, it is very clear that drama, music, dance should also be considered as social functions. We are in agreement with the reasoning of the CBEC in its Circular of 1997. Hence, the decision of the lower authorities in holding that the services rendered by the appellants is liable to service tax under the category of Mandap Keepers is correct. However, it is found that the appellants were under a bonafide belief that they would not be liable to service tax. Hence, this is a case where Section 80 of the Finance Act, 1994 can be invoked with regard to penalties. In fine, the appellants are liable to pay the Service Tax demanded along with interest. All the penalties are set aside. The appeal is disposed off in the above terms.
(Pronounced in open Court on 28.11.2006)