Madras High Court
Salem District Sound System ... vs Union Of India (Uoi) on 19 April, 2001
Equivalent citations: 2001(131)ELT6(MAD), 2006[2]S.T.R.383, [2007]6STT267
Author: V.S. Sirpurkar
Bench: V.S. Sirpurkar, A. Kulasekaran
ORDER V.S. Sirpurkar, J.
1. The instant writ petition has been filed at the instance of an Association called Salem District Sound System Association, represented by its Secretary Mr.V. Perumal. The said Association has about 348 members. The claim of the petitioner in paragraph 2 of the petition is as follows : -
"The petitioners Association members are providing sound system to the members of the public and not any other service apart from sound system. There are 348 members in the petitioner Association and all the members are doing only sound system to the public as and when they are required.
(emphasis supplied).
2. By the instant petition, the petitioner Association challenges a notice, dated 25-9-1997, sent to the Association by the Assistant Commissioner of Central Excise, Salem Division, Salem-4, vide C. No. IV/16/148/97-STC. By the said notice, the Assistant Commissioner, who is the 3rd respondent herein, has invited the attention of the Association to Section 88 of the Finance Act, 1997, providing for levy of service tax on the services rendered by Pandal or Shamiana Contractors, which is brought under Service Tax net with effect from 1-8-1997, vide Notification No. 35/97, dated 25-7-1997. The third respondent has further highlighted the definition of "pandal or shamiana contractors" as given in the Act and also pointed out that the service offered by such a contractor is a taxable service, which attracts Service Tax at 5%. It is then pointed out in paragraph 4 of the notice that the tax is payable before 15th of September 1997 and thereafter, before 15th of the subsequent months and, therefore, the members of the petitioner Association should register within three days from the date of receipt of the notice and pay the tax. It is also pointed out that belated payment attracts the penal clause charging interest and in the event of delay in registration, further action would be taken. It is this notice, which is challenged by the petitioner Association on the ground that it is only without jurisdiction and baseless, as the provisions of the Finance Act, levying tax on the basis of Section 65(27) of the Service Tax. Act, are not applicable to the petitioners. Learned Counsel for the petitioner further contends that the notice reads that non-compliance would invite penal consequences and, therefore, it was necessary to file the writ petition.
3. Learned Counsel invited our attention to Sections 65(26) and 65(27) of the Act, which read as under : -
"Section 65(26) :- "Pandal or Shaniiana means" a place specially prepared or arranged for organising an official, social or business function.
Section 65(27):- "Pandal or Shamiana contractor" means a person engaged in providing any service either directly or indirectly in connection with the preparation, arrangement erection or decoration of a Pandal or Shamiana and includes the supply of furniture, fixtures, lights and lighting fittings, floor coverings and other articles for the use therein."
4. The learned Counsel also invites our attention to the further provision under Section 65(41)(o), which is as under : -
"Taxable service means any service provided to a client by pandal or shamiana contractor in relation to a pandal or shamiana in any manner and also includes the services, if any, rendered as a caterer."
5. Learned Counsel for the petitioner points out that these provisions were introduced by the Finance Act, 1997, with effect from 1-8- 1997. It is, however, to be seen here that Section 65, as was framed under the Finance Act 1997, underwent a change in the Finance Act 1998 which came into effect from 16-10-1998 and under the new Section 65, the definitions of "pandal or shamiana" and "pandal or shamiana contractors" as also "taxable service", defined under Section 65(41)(o) were deleted. Under the present Section 65, we do not find that any service provided by the pandal or shamiana contractor has been made taxable. In short, the aforesaid provisions remained on the statute book in an effective form, to cover a period from 2-6-1998 to 16-10-1998. The learned Counsel points out at this juncture that the petition, which would have ordinarily been rendered infructuous, because of the change in the sub-section of the law, which we have indicated above, would not be rendered infructuous as, even otherwise, if the provisions are applicable to the members of the petitioner Association, they would be required to pay the tax atleast for the period indicated above and, therefore, the petition does not become infructuous. We agree with the petitioner's counsel that the petition does not become infructuous because of the subsequent change and the amendments in Section 65. On this backdrop, we will have to consider as to whether the contentions raised by the learned counsel for the petitioner that the provisions of Sections 65(26), 65(27) and 65(41)(o) are totally inapplicable to the members of the petitioner Association is correct.
6. At the outset, the learned Counsel for the petitioner invited our attention to the counter filed on behalf of the respondents. In paragraph 4 thereof, the following contention is raised at the instance of the respondents :-
"I state that the petitioners have filed the writ petition in a representative capacity that there are 348 members in their association and all the members are doing sound system to the public as and when required. The petitioners have not stated that they are not engaging their services in pandal and shamiana contractors and as such those who are engaging the sound system along with the pandal and shamiana contractors will be covered under the service tax net and those who are independently performing sound system alone may not be attracted for the levy of service tax. The petitioners association has filed the present writ petition in a bald manner stating that all the 348 members are performing or engaging the sound system alone without stating that they have no connection with the shamiana and pandal contractors, of, they are engaging their sound system along with the pandal and shamiana contractors. I state that unless and until the above said distinction is made out it would be difficult for the respondents to state whether they would come under the service tax net or not.
(emphasis supplied)".
We have deliberately quoted the whole paragraph in the counter because, firstly, according to the learned Counsel for the petitioner, the aforesaid contents of the counter are totally incorrect. The learned Counsel takes us to paragraph 2 of the affidavit, which we have partly quoted in the beginning of this order. There itself there is a specific statement made by the petitioner that all the 348 members of the petitioner Association are providing sound system only and they do not provide any other service apart from the sound system. This contention in paragraph 2 is further reiterated by the use of the words "all the members are doing only sound system to the public". Therefore, the assertion in the counter that the petitioner has not stated that its members do not provide any other service excepting sound service is obviously not correct. It has, therefore, to be held that since the petitioner's affidavit has not been factually contradicted the claim of the petitioner that all the 348 members provide only sound system service stands unrebutted and admitted.
7. If that is so, then the further question is as to whether a person who merely offers sound service can be covered under the definition "pandal or shamiana contractor" under Section 65(27) of the Act. The simple answer to this question would be in negative. The specific provision in Sections 65(26) and 65(27) makes it clear that the Legislature did not intend to include the persons providing sound service system in the definition of "pandal or shamiana contractors". Firstly, the counter itself makes an admission, which we have highlighted above. The admission is specific that those who are independently performing sound system alone may not be attracted for levy of service tax.
8. Apart from the admission discussed above, the language of the statute does not permit the inclusion of the persons providing sound service into the tax net, via Section 65(27) of the Act as it then was. A feeble attempt was made to suggest that the terminology "and other articles for the use therein" would also include those persons who provide sound service to a pandal. In our opinion that contention is clearly incorrect. The earlier words of the definition are "and includes the supply of furniture, fixtures, lights and lighting fittings, floor coverings and other articles for use therein". If the Legislature had intended to include the sound service providers into the definition, they should have added the words "sound fittings", especially, when they have specifically provided "lights and lighting fittings". That apart, the words "and other articles" will have to be interpreted keeping in mind the salutary principle ejusdem generis. The words, "and other articles for use therein", which provide a broader category will have to draw their colour from the accompanying earlier words, which form a class by themselves. For this reason also we are of the clear opinion that the sound system operators would not be covered under the provisions of Section 65(27) of the Act.
9. As it is, since the said service has been taken out of the tax net, there will be no question of granting any writ, excepting to quash the impugned notice dated 25-9-1997. It is hereby declared that the persons like the petitioners alone would not be liable to the payment of service tax. However, it is clarified that if such persons have provided any other service, the situation would be entirely different. But, that would depend upon the facts and circumstances of each individual case. With these observations, the writ petition is allowed. Under the circumstances, there will be no order as to costs.