Erection of pandal or shamiana attracts ST
BOARD informs that it has received "several" representations seeking clarification as to whether the activity of preparation of place for organizing event or function by way of erection/ laying of pandal and shamiana is liable to Service Tax, the reason for ‘doubt' being that the transaction allegedly involves "transfer of right to use goods" and hence may be called as ‘deemed sale'.
Pursuant thereto, the Board has examined the issue and mentions that activity by way of erection of pandal or shamiana is a declared service, under section 66E 8(f) of the FA, 1994 and the same is a reasonably specialized job and is carried out by the supplier with the help of his own labour; that for a transaction to be regarded as ‘transfer of right to use goods' the transfer has to be coupled with possession which apparently is missing in this case inasmuch as effective possession and control over the pandal or shamiana remains with the service provider, even after the erection is complete and the specially made-up space for temporary use is handed over to the customer.
The decision of Andhra Pradesh High Court in the case of Rashtriya Ispat Nigam Ltd. vs. CTO [1990 77 STC 182] as upheld by the Supreme Court (), the decision of the Punjab & Haryana HC in Harbans Lal vs. State of Haryana - [1993] 088 STC 0357 and the Supreme Court decision in BSNL Vs. UOI () have been cited to explain what constitutesa transaction for the transfer of the right to use the goods.
And the Board finally concludes by saying -
"5. Applying the ratio of above judgments and the test formulated by Hon'ble Supreme Court, the activity of providing pandal and shamiana along with erection thereof and other incidental activities do not amount to transfer of right to use goods. It is a service of preparation of a place to hold a function or event. Effective possession and control over the pandal or shamiana remains with the service provider, even after the erection is complete and the specially made-up space for temporary use handed over to the customer.
6. Accordingly services provided by way of erection of pandal or shamiana would attract the levy of service tax."
Hope this clarification was not necessitated by the DGCEI raids that took place pursuant to the ostentatious show of wealth at a wedding in Maharashtra which was in the news some months ago.
Circular dated 15th April, 2013