By TIOL News Service

MUMBAI, JUNE 02, 2017: A SCN was issued to the appellant Brihanmumbai Municipal Corporation demanding service tax under the head 'Mandap keeper services' for the period 01.10.1998 to 30.09.2003 for the amounts collected by them as fees for providing / hiring and renting out the halls / open spaces / theatres and auditoriums to various parties.

The appellant contested the allegations stating that they being a statutory body are exempted from payment of service tax and in any case extended period cannot be invoked as they were under bonafide belief that they are not liable to pay service tax.

The adjudicating authority did not agree and confirmed the demand with interest and also imposed penalties. Amounts deposited by appellant during investigation were also appropriated.

Aggrieved, the appellant is before the CESTAT.

The Bench inter alia observed -

"Appellant is not disputing the fact that renting out the halls / open spaces/ theaters and auditoriums to their clients are allowed for temporary occupation for a consideration… show-cause notice dated 16.04.2004 is invoking the extended period of limitation against the appellant. In our considered view, appellant being BrihanMumbai Municipal Corporation and a statutory body, could not be held to have been suppressing the facts with intent to evade service tax liability. The findings recorded by the adjudicating authority that the appellant should have applied for registration or approached to department for clarification about the taxability of the revenue forming part of their income is enough to invoke extended period of limitation, is incorrect appreciation of fact and law by the adjudicating authority."

Noting that such view is fortified by the decision of the Tribunal in the case of GadkariRangayatan v. CST – 2013-TIOL-2187-CESTAT-Mum wherein identical issue of service tax liability under ‘mandap keeper services' was alleged against Thane Municipal Corporation for renting out the auditorium and upheld by the Bench but limited the demand for the normal period in view of the assessee being a statutory body, the CESTAT directed the adjudicating authority to re-compute the tax demand for the normal period.

The appellant was held liable to pay interest on the re-computed tax liability and penalties were waived by invoking the provisions of s.80 of the FA, 1994.

The appeal was disposed of.

(See 2017-TIOL-1846-CESTAT-MUM)