By TIOL News Service

MUMBAI, AUG 05, 2013: THE appellant rented out their premises at Ajivasan Hall, Juhu Tara Road, Mumbai to M/s Hotel Siddharth in terms of agreement entered into between the two parties. As per the said agreement, Hotel Siddharth agreed to furnish an interest free deposit of Rs.40 lakhs to the appellant, of which they had already paid a sum of Rs.25 lakhs and the balance payment to be paid at the time of occupation of the premises.

The department classified the said activity under the category of “Mandap Keeper Service” and demanded Service Tax on the sum of Rs.25 lakhs received by the appellant.

In the words of the CESTAT, even the lower appellate authority ‘mechanically' confirmed the demand and rejected the appeal.

The appellant submitted that in the SCN, neither was the Service Tax demand quantified nor the period specified. Inasmuch as since the SCN is bad in law, the subsequent action taken by the department from such a show-cause notice also should held invalid and the appeal be allowed, prayed the appellant.

The Bench observed -

"5. We have perused the records. In the instant case, the appellant has hired/leased out the premises to Hotel Siddharth in consideration for an interest free deposit of Rs.40 lakhs. The said transaction does not come under the purview of ‘Mandap keeper Service' under section 65(67) of the Finance Act, 1994. The Mandap Keeper means ‘a person who allows temporary occupation of a Mandap for consideration for organizing any official, social or business function'. The crucial word is temporary occupation.

5.1 From the records, we find that the premise is not given for temporary occupation by Hotel Siddharth. Therefore, the impugned order is not sustainable in law…."

In fine, the order was set aside and the appeal was allowed.

(See 2013-TIOL-1175-CESTAT-MUM)