Service Tax - Shamianas for Magh Mela in Allahabad - No Tax
THIS is a strange case.
The petitioner/assessee supplied pandals and shamianas to the Officer in charge of the Allahabad Magh Mela; let us call him the OIC. The OIC refused to reimburse Service Tax to the assessee on the ground that no Service Tax is payable on Pandal or Shamiyana services provided by the assesseeas it was for pure religious ceremonies.
The assessee filed a writ in the Allahabad High Court, way back in 2005 against the OIC seeking a direction for payment of Service Tax along with interest and penalty.
The Central Excise Department has filed a counter affidavit contending that the petitioner is a "Mandap keeper" and, accordingly, Service Tax is liable to be paid by him.
Definitions:
Pandal or Shamiyana 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 Shamiyana and includes the supply of furniture, fixtures, lights and light fitting, floor covering and other articles for the use therein.
"mandap keeper" means a person who allows temporary occupation of a mandap for a consideration for organising any official, social or business function.
Board's clarification dated 17.9.2004:
It is clarified that pandal/shamiana services provided for pure religious ceremonies or congregation for example, for worship of Gods/Goddesses, are not liable to service tax. It is also clarified that in case a cafe, hotels, restaurants etc. delivers food to home and no charge, other than that for the cost of the foods, is charged (i.e. free home delivery) no service tax is leviable.
The High Court in its judgement last week observed,
It is clear, that a Mandap Keeper is a person who allows temporary occupation of a Mandap for organizing any official, financial, social or business function. The Mandap is in relationship to any immovable property as defined under Section 3 of the Transfer of Property Act, 1882 and includes any furniture and fixtures etc.
The definition of Mandap Keeper and Mandap makes it apparently clear that the petitioner does not come under this definition clause.
The petitioner is a Pandal or Shamiyana contractor providing services in connection with the preparation, arrangement, erection or decoration of a Pandal or Shamiyana.
Further, Mandap keeper is for organization of any social, official or business function. However, the Department has issued a clarification dated 17.9.2004 which provides that Pandal or Shamiyana keepers will not be liable for Service Tax, if they provide services for purely religious ceremony and congregation.
It is clear that services provided by a Shamiyana and Pandal contractor for a religious fair or congregation in the Mela area at Allahabad would be covered under the Circular dated 17.9.2004.
In the instant case the tender invited by the Mela Officer was for the purpose of erection of temporary tents etc. in the Mela area during the MaghMela season for the year 2004-05.
Since the supply of the tents by the petitioner was for a religious congregation, which was held in the Mela area at Allahabad, the respondent No.1 was not liable to pay the Service Tax to the petitioner.
Accordingly the relief claimed by the petitioner cannot be granted.
The writ petition is dismissed with the observation that it is not open to the Central Excise Department to demand Service Tax on the services provided by the petitioner in the Mela area for the year 2004-05.
Technically, the assessee lost the writ petition, but it was a huge success for him that neither he nor the OIC needs to pay the Service Tax! His appeal was dismissed, but he would be smiling all the way to the bank. The loser is the Service Tax Department which wanted to collect some tax out of the magh (kumbh)mela.
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