By TIOL News Service

MUMBAI, SEPT 26, 2017: THE question is whether the appellant is liable to pay service tax under the category of Mandap Keeper Service for the room rent received from hotel guest.

The Appellant inter alia submits that Mandap Keeper Service does not cover accommodation service by offering rooms for short-term stay in the hotel owned by the Appellant. Inasmuch as accommodation service has been specifically brought within the ambit of service tax with effect from 01 May 2011 by inserting a new taxable entry under section 65 (105)(zzzzw) of the Finance Act, 1994.

Reliance is placed on the following decisions wherein it is held that room rent charged by the hotels for short-term stay cannot be levied with service tax as mandap Keeper Service:

a) Rambagh Palace Hotels Pvt Ltd. -2012-TIOL-673-CESTAT-DEL

b) M/s Taj Hari Mahal - 2017-TIOL-909-CESTAT-DEL

c) Merwara Estates - 2009-TIOL-871-CESTAT-DEL

That the CESTAT had in their own case - 2017-TIOL-1624-CESTAT-MUM held that both the lower authorities were in error in coming to a conclusion that the appellant needs to be taxed under 'Mandap Keeper Service' for the entire amount of the room rent collected by them. Ground of the demand being hit by limitation is also pleaded.

The AR, while reiterating the order of the lower authorities, submitted that the appellant are engaged in providing Mandap Keeper Service wherein the client availed the services of banquet along with lodging in the rooms of the appellant;that the appellant is paying service tax only on the banquet and food after availing of 40% abatement whereas against composite amount for banquet, food and room charges they have not included the charges of rooms;that there is no abatement or exemption provided in respect of part of the service charge of Mandap Keeper Service on room service, therefore, the appellant is supposed to consider the total value which includes banquet, food, hotel rooms etc. and thereafter after availing 40% abatement on such amount, service tax should have been paid.

The Bench observed in view of its order dated 13.04.2017 - 2017-TIOL-1624-CESTAT-MUM and the case laws cited the issue is no more res integra since it was held that room rent cannot be charged to service tax under the head of Mandap Keeper Service.

On the plea of limitation, the CESTAT observed that on the same facts, earlier some proceedings were initiated and matter was settled by the Tribunal; thereafter, on the same set of facts for the present proceeding show-cause notice was issued invoking the extended period; therefore, the demand for the extended period cannot be sustained on limitation also.

The impugned order was set aside and the appeal was allowed on merits as well as limitation.

(See 2017-TIOL-3488-CESTAT-MUM)