ST - Marriage as social institution existed much before religions came into being - explanation inserted by Finance Act, 2007 is only by way of abundant caution and, therefore, insertion of same does not affect levy of ST on Mandap Keeper Service rendered in connection with marriages - ST payable: CESTAT
By TIOL News Service
MUMBAI, SEPT 12, 2013: THIS is a Revenue appeal.
The respondent owns a hall. The said hall was rented out for conducting marriages and consideration was collected for such renting. The department was of the view that the said activity came under the purview of ‘Mandap Keeper Services and accordingly issued two notices dated 29.9.2004 and 20.4.2005 demanding Service Tax of Rs. 1,00,842/- and Rs. 23,929/- for the period July, 1999 to March 2004 and April, 2004 to Sept, 2004.
The notices were adjudicated and the demands were confirmed and penalties were imposed. The appellant preferred an appeal before the lower appellate authority, who vide the impugned order held that marriage is a religious function and, therefore, the activity is not taxable as held in Commissioner of Central Excise, vs. Krishnapur Mutt - (2003-TIOL-262-CESTAT-BANG).
And so, the Revenue is in appeal before the CESTAT.
It is submitted that -
+ Marriage is a ‘social function' and not a ‘religious function'.
+ As for the reliance placed on the Krishnapur Mutt case, it is submitted that in that case the Mandap was let out free of cost and, therefore, the ratio of the said decision does not apply.
+ reliance is placed on the decision in Shree Gujarati Samaj Bhavan Vs. Commissioner of Central Excise, Bhopal - (2006-TIOL-899-CESTAT-DEL), wherein it was held that marriage is a social function relying on the decision of the Apex Court in the case of Tamil Nadu Kalyana Mandapam Association Vs. Union of India - (2004-TIOL-36-SC-ST). In the said decision, the ratio of the Krishnapur Mutt (supra) was also distinguished as there was no consideration paid to the Mutt for conducting of marriage.
+ It is, therefore, prayed that the impugned order be set aside and the appeal be allowed.
The respondent submitted that the marriage is a religious functions and the Finance Act, 2007, had added an explanation to specifically provide for ‘marriage' to be considered as a ‘social function' for the purposes of levy of Service tax. Inasmuch as ‘marriage' has to be considered as a religious function only prior to 2007 and not otherwise and the explanation added has prospective effect and cannot be applied retrospectively. It was also submitted that even if it is held that the marriage is a "social function", the demand for the extended period of time is not sustainable as the appellant was under the bona fide belief that the marriage is a "religious function" as held in the Krishnapur Mutt case. Accordingly, it is pleaded that the demand for the extended period of time be set aside along with penalty.
The Bench observed -
"6.1 Marriage as a social institution existed much before the religions came into being and, therefore, it is futile to argue that the marriage is a religious function. The law itself recognizes registered marriage as a legally valid form of marriage and there is no religious sanctity attached to such registered marriages. Therefore, the mode of conducting the marriages either by following religious rituals or otherwise does not make marriage a 'religious function'. Therefore, following the decision of the Tribunal in the case of Shri Gujarati Samaj Bhavan (supra), we hold that the marriage is a social function and not a religious function.
6.2 The explanation introduced by Finance Act, 2007 is only by way of abundant caution. Therefore, insertion of the explanation, in our view, does not affect the levy of Service Tax on Mandap Keeper Service rendered in connection with marriages.
6.3 As regards the plea of time bar, there is merit in this submission. In view of the Tribunal's decision in the case of Krishapur Mutt case, the appellant could have been under the bona fide belief that their activity of letting out of hall for conducting marriage is not taxable. Accordingly, we give benefit of doubt to the appellant and hold that Service Tax demand is sustainable only for the normal period of limitation.
6.4 As regards the penalties imposed on the appellant, since the issue relates to interpretation of the statute, penalties are not warranted."
In fine, the order passed by the Commissioner (A) was set aside and the Revenue appeal was allowed subject to the modification that the demand is sustainable only for the normal period of limitation; the service tax was required to be re-computed by allowing cum-tax benefits; penalty was held as not imposable; interest was required to be paid by respondent.
(See2013-TIOL-1351-CESTAT-MUM)
