ST - Appellant, Mandap keeper, collects compulsory donation from service recipients while booking hall for social functions - such sums are required to be taken into consideration for arriving at gross value - since appellant never disclosed factum of collecting donations, extended period is rightly invoked: CESTAT
By TIOL News Service
MUMBAI, NOV 15, 2013: THE assessee is a Charitable Trust and registered with the CE authorities at Nashik as a provider of taxable service of Mandap Keeper since 2001.
It is the case of the Revenue that the assessee is receiving certain charges as donation from the persons who are booking halls for social functions and which is required to be included in the gross amount while paying Service Tax.
The adjudicating authority upheld the demand of Rs.3,51,192/- along with interest and penalty. In appeal, the Commissioner (A) by invoking the provisions of section 80 of the Finance Act, 1994 reduced the penalty to Rs.90,000/- being about 25% of the amount of tax involved.
Now, both the assessee and the Revenue are in appeal before the CESTAT.
The appellant-assessee submitted that they are regularly payingthe service tax after taking into consideration the receipt in respect of hall maintenance charges. Furthermore, the service recipients are separately donating amounts ranging from Rs.12,000/- to Rs.15,000/- to the Trust and this amount is not taken into consideration while discharging the Service Tax as the same, in their view, cannot be considered as a consideration for providing service of mandap keeper and, therefore, the demand is required to be set aside. It is also submitted that the demand is hit by limitation as the allegation of suppression with intent to evade payment of tax cannot sustain. Inasmuch as since the practice of accepting donation is much prior to the imposition of service tax it could not be said that this practice was adopted just to evade payment of service tax.
The Revenue representative submitted that verification was conducted during investigation and it was found that every person who booked the hall has paid donation and the amount of donation is more than the hall maintenance charges; that hall is booked only if the person is willing to pay donation. As such, the amounts which are received as donation in respect of booking of the hall are to be taken into consideration for arriving at the gross value of the taxable service of mandap keeper.
The Bench observed -
"7. It has come on record that the hall is booked on the condition that the service recipient will pay the donation. As the donation is compulsory for booking of the hall for social function, in these circumstances, we find no merit in the contention of the appellant-assessee that this amount is not to be counted towards the gross amount towards booking of the hall for social function. In respect of the extended period of limitation, we find that the appellant-assessee never disclosed to the Revenue that they are collecting donations at the time of booking of the hall hence we find no infirmity in the impugned order whereby the demand is confirmed after invoking the extended period of limitation hence the appeal filed by the appellant-assessee is dismissed."
In the matter of the Revenue appeal regarding reduction of penalty by the Commissioner(A), the CESTAT noted that since the appellant-assessee were following the same practice (of collecting compulsory donation) even prior to the introduction of service tax on mandap keeper and it is not the case of the Revenue that the practice was adopted by the appellant-assessee after the introduction of service tax, the reduced penalty would meet the ends of justice and there was no ground for enhancement of the same.
In fine, both appeals - one by the assessee-appellant and the other by the Revenue were dismissed.
(See 2013-TIOL-1706-CESTAT-MUM)
