Custom, Excise & Service Tax Tribunal
Avrn Hotels Pvt Ltd vs Chennai-Iv on 28 October, 2024
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, CHENNAI
Excise Appeal No.40213 of 2015
(Arising out of Order in Original No. CHN-SVTAX-000-COM-011-14-15 dated
14.10.2014 passed by the Commissioner of Service Tax, Chennai)
M/s. AVRN Hotels Pvt. Ltd. Appellant
No. 12, Jawaharlal Nehru Road
Arumbakkam, Chennai - 600 106.
Vs.
Commissioner of GST & Central Excise Respondent
Chennai Outer Commissionerate
Newry Towers, 12th Main Road
Anna Nagar, Chennai - 600 040.
APPEARANCE:
Shri Haardik Rathort, Advocate for the Appellant
Smt. O.M. Reena, Authorized Representative for the Respondent
CORAM
HON'BLE SHRI P. DINESHA, MEMBER (JUDICIAL)
HON'BLE SHRI VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
FINAL ORDER NO. 41376/2024
Date of Hearing : 09.10.2024
Date of Decision: 28.10.2024
PER P. DINESHA
1. The issues that crop up for our consideration in this appeal are:
(i) The liability of the appellant under 'Mandap-Keeper' Service,
and
(ii) Invocation of extended period of limitation for fastening the
service tax liability under the above service.
2. Show-cause notice dated 12.10.2012 was issued to the appellant
proposing to demand service tax under Mandap-keeper service for the
period 2007-08 to 2011-12 [upto January 2012], along with applicable
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interests and penalties. The appellant appears to have filed a detailed
reply refuting the charge of the Revenue as to any liability to service
tax contending inter alia that
➢ Our hotel operated under the name of "Vijay Park" is highly
reputed and well equipped to meet the needs of diverse customer
groups. Apart from our excellent accommodation, our catering
services are much sought after as a variety of cuisines including
Chinese, Continental, Italian etc. are available. While we operate
.... restaurants under the names of ..... and a bar known as .....,
it is commonly seen that large groups of families or friends or
other such groups often wish to host largescale lunches, dinner,
high tea or similar meals for large numbers as a buffet or table
service with or without cocktails. In those cases, as the existing
restaurants are not ideally suited, we offer the use of our banquet
halls namely Nesam, Appadurai Nadar, Maharajan Nadar, Radha,
Anitha, Ahila, Jayaraghavan Nadar, Jai, Madhu, Sukanya or
Aparna depending on the number of guests expected. The use of
such halls is completely subservient to the customer's main
requirement of providing catering services to large groups which
the restaurants cannot accommodate and the seating
arrangements are therefore made according to the likes of the
customer.
➢ In many cases, as is common in our culture and society, very
large groups host lunches or dinners for several hundreds of
people with no particular purpose other than to serve high quality
food to their friends or family or colleagues. In those cases, our
banquet halls serve as a suitable when compared to the limited
space offered by our restaurants to seat and accommodate
people for the purpose of serving food and beverages on a large
scale
➢ Thus, the use of our halls in the impugned transactions was
provided only as an ancillary facility in those cases where our
customers wish to avail our hotel's reputed catering services for
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large groups or gatherings. The banquet halls are thus used to
facilitate the provision of the primary services viz. catering.
➢ Sales tax collected on the food charges on which they had filed
VAT returns which were also furnished to the learned authority
➢ There is no suppression since they had remitted sales tax and
hence the extended period of limitation was not invocable.
3. Para 3 of the Order in Original No. 11/2014-15 dated 14.10.2014
records that on verification of the invoices and banquet order forms, it
was noticed that whenever a function was held in any of the above said
halls, normally food was also served to the guests as detailed in the
banquet menu card and at the rate per head specified therein.
4. The Order in Original has confirmed the proposed demands,
which order has been assailed in this appeal before this forum.
5. Heard Shri Haardik Rathort, learned Advocate for the appellant
and Smt. O.M. Reena, learned Additional Commissioner for the
Respondent-Revenue. We have carefully considered the documents
placed on record, the impugned order and also various judicial
pronouncements relied upon during the course of hearing before us.
5.1. After hearing both sides, we find that there is not much of dispute
insofar as facts are concerned, rather the dispute pertains to the
liability of the appellant under 'mandap-keeper' service.
6. We find it relevant to reproduce the relevant provisions of the
Statute to start with.
S. 65(66) of the Finance Act, 1994 defines Mandap to mean
any immovable property as defined in section 3 of the
Transfer Of Property Act, 1882 and includes any furniture,
fixtures, light fittings and floor coverings therein let out for
a consideration for organizing any official, social or business
function.
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S. 65(67) of the Finance Act, 1994 defines Mandap-keeper
to mean a person who allows temporary occupation of a
mandap for a consideration for organizing any official, social
or business function.
Taxable service u/s 65(105)(m) means any service provided
or to be provided to any person, by a mandap keeper in a
relation to the use of mandap in any manner including the
facilities provided or to be provided to such person in
relation to such use and also the services, provided or to be
provided as a caterer.
7. Section 67 deals with valuation of taxable services for charging
service tax as per which, the value of taxable services - in relation to
service provided by Mandap keeper to a client, shall be the gross
amount charged by such mandap-keeper from the client for the use of
mandap, including the facilities provided to the client in relation to such
use and also the charges for catering, if any.
8.1. We have carefully perused the invoices placed on record as well
as the written submissions filed before us and before the ld. lower
authority. It is clear that the appellant has not charged service tax on
its customers, it has only collected sales tax which is claimed to have
been remitted through their VAT returns. It is thus their case that when
they have admittedly paid applicable sales-tax, there can be no levy
under service tax as well, since both are mutually exclusive.
8.2. Per contra, it is the case of the Revenue that the appellant had
not only made available the food and beverages, but had also made
available lights, fans, their own staff used in rendering catering service
to the guests, etc. and therefore, the charges for sale of food was
inclusive of these service elements. The levy was thus justified and
hence, the impugned order is perfectly in order. She also relied on the
decision of Hon'ble Apex court in Tamil Nadu Kalyana Mandapam
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Association Vs. Union of India - 2006 (3) STR 260 (SC) [TNKMA for
short] which has been extensively relied upon by the Adjudicating
Authority in the impugned order.
9. We have very meticulously gone through facts of the case on
hand in the light of the decision of Hon'ble Apex court in the case of
TNKMA supra.
10. Notification No.19/97 issued by the government whereby the
'appointed day' was notified, followed by the issuance of a Trade Notice
No.9/97 dated 01.07.1997, which stated that the scope of the said
Notice was very wide to include within its scope, places like Kalyan
mandap, marriage halls, banquet halls, conference halls, etc., and
hotels and restaurants providing any such facilities would also be
included in the coverage of service tax.
11. At this juncture, we deem it most relevant to reproduce some of
the paragraphs of the decision of Hon'ble Apex court in TNKMA case
[supra].
"---
44. The concept of catering admittedly includes the concept
of rendering service. The fact that tax on the sale of the
goods involved in the said service can be levied does not
mean that a service tax cannot be levied on the service
aspect of catering.
--
45. It is well settled that the measure of taxation cannot affect the nature of taxation.
--
--
54. In fact, making available a premises for a period of few hours for the specific purpose of being utilized as a Mandap whether with or without other services would itself 6 E/40213/2015 be a service and cannot be classified as any other kind of legal concept...
55. In fact, Mandap Keepers provide a wide variety of services apart from the service of allowing temporary occupation of mandap ..... The services provided by him cover method and manner of decorating and organizing the mandap.... In fact, the logistics of setting up, selection and maintenance is the responsibility of the mandap keeper .... The services provided by a mandap keeper are professional services which he alone by virtue of his experience has wherewithal to provide.
...."
12. In fact, wide range of services are included in the definition of taxable services as far as 'mandap-keeper' is concerned. The said definition includes services provided in relation to use of mandap in any manner and includes the facilities provided to the client in relation to such use and also services rendered as a caterer. In fact, making available a premises for a period of few hours for the specific purpose of being utilized as a mandap, whether with or without other services would itself be a service and cannot be classified as any other kind of legal concept. We have noted that under S. 65(66) of the Finance Act, 1994, Mandap means any immovable property as defined in section 3 of the Transfer of Property act, 1882 and includes any furniture, fixture, light fittings, and flour covering therein, let out for consideration for organizing any official, social or business function.
13. The learned counsel had also contended that the decision of the Hon'ble Supreme Court in the case of TNKMA was not applicable or that the same does not preclude the application of the predominant purpose / primary use test to determine correct classification of the service and in the case of those invoices issued by the appellant, services were 7 E/40213/2015 nothing but catering service (primary purpose) and the provision of banquet hall was only ancillary.
14. The Hon'ble Supreme Court in the above case has very clearly dealt with even this aspect at para 57, which reads as under:-
"57. A tax on services rendered by mandap-keepers and outdoor caterers is in pith and substance, a tax on services and not a tax on sale of goods or on hire purchase activities. Section 65 clause 41 sub-clause (p) of the Finance Act, 1994, defines the taxable service (which is the subject matter of levy of service tax) as any service provided to a customer by a mandap-keeper in relation to use of a mandap in any manner including the facilities provided to a customer in relation to such use also the services, if any, rendered as a caterer. The nature and character of this service tax is evident from the fact that the transaction between a mandap-keeper and his customer is definitely not in the nature of a sale of hire purchase of goods. It is essentially that of providing a service. In fact, as pointed out earlier, the manner of service provided assumes predominance over the providing of food in such situations which is a definite indicator of the supremacy of the service aspect. The legislature in its wisdom noticed the said supremacy and identified the same as a potential region to collect indirect taxes. Moreover, it has been a well established judicial principle that so long as the legislation is in substance, on a matter assigned to a legislature enacting that statute, it must be held valid in its entirety even though it may trench upon matters beyond its competence. Incidental encroachment does not invalidate such a statute on the grounds that it is beyond the competence of the legislature (Prafulla Kumar v. Bank of Commerce). Article 246(1) of the Constitution specifies that the Parliament has exclusive powers to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule to the Constitution. As per Article 246(3), the State Government has exclusive powers to make laws with respect to matters enumerated in List II (State List). In respect of matters enumerated in List III (Concurrent List) both Parliament and State Government have powers to make laws. The service tax is made by Parliament under the above residuary powers."
[Emphasis added]
15. From the above, the contention of the appellant has also been answered against the taxpayer by the Hon'ble Supreme Court.
16. In view of the above, we are of the clear view that the Commissioner (Original Authority) was correct in confirming the demand under Mandap-Keeper Service on the appellant. 8
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17. The disputed period for which the service tax has been confirmed is from April 2007 to January 2012; the appellant has contended that there is no suppression since it was under a bonafide belief that it remitted sales tax on the ground that there was only sale of food without involving any service. In the impugned order, the original authority has held that the liability to service tax under Mandap Keeper Service arose due to non-declaration of the gross value of the appellant's service income detailed in the P&L account as banquet food sales, in the taxable value as per the statutory ST-3 returns filed by them. It was thus held that the above facts were suppressed intentionally so as to evade payment of appropriate service tax. 17.1 We are unable to accept the logic in the impugned order justifying the invocation of extended period. Admittedly, the appellant has claimed that under a bonafide belief they have collected sales tax which was remitted promptly with their VAT returns, which is not disputed. Moreover, it is also not disputed by the Revenue that wherever food is arranged in such banquet hall, the appellant had only charged VAT / sales tax and no service tax was charged from its customers. We find that the reliance placed on the decision of Apex court in Commissioner of Service Tax, Mumbai Vs. M/s. UFO Moviez India Ltd [(2022) SCC Online SC 959] by the appellant is apt, wherein the Hon'ble court has held that suppression means failure to disclose full information with the intent to evade payment of duty. But here, in the case on hand, suppression cannot be alleged since the bonafides insofar as remittance of sales tax are not doubted. Hence, we are of the view that the demand confirmed which stands upheld by us shall 9 E/40213/2015 be limited to the normal period alone, since we are satisfied that there is no case of suppression whatsoever, that too, to evade payment of duty.
18. In the result, we restrict the demand to the normal period. The interest charged under sec. 75 of the Act ibid also stands confirmed to the normal period alone. But, however, we set aside the penalties imposed under sections 77 and 78 of the Act ibid on the appellant. The appeal is partly allowed, as indicated above.
(Order pronounced in open court on 28.10.2024) (VASA SESHAGIRI RAO) (P. DINESHA) Member (Technical) Member (Judicial) Rex