By TIOL News Service

MUMBAI, SEPT 02, 2016: THIS is an appeal filed in the year 2011 against an o-in-a.

The issue is regarding undervaluation of the amounts received during the period October 2005 to March 2006 for the 'catering services' provided in addition to 'mandap-keeper services'.

Revenue alleges that the assessable value has been suppressed by the appellant for the period in question, hence service tax liability arises.

The appellant accepted the service tax liability and discharged the same with interest. However,they seekleniency in the matter of imposition of penaltyon the ground that they were under bonafide belief that service tax liability does not arise for the amounts received for 'marriage function' as the same is a 'religious function'.

The Bench observed -

"6. Since the appellant is not contesting the tax liability on merits and has discharged the same along with interest, the said tax liability is upheld for the period in question. As regards penalty, we find that appellant could have, in the facts and circumstances of this case, entertained a bona fide belief that service tax liability may not arise on the amounts received towards the marriage functions solemnized in their premises. In our considered view, since the definition of 'mandap-keeper' was amended in 2007 to include social functions which included marriage and religious functions, the appellant could have entertained a bona fide belief that marriage is a religious function. In the absence of any other contrary evidence, we find that this bona fide impression may have resulted in non-payment of the service tax by the appellant. In our view, this is a fit case to invoke the provisions of section 80 of the Finance Act 1994."

In fine, by invoking the provisions of Section 80, the Bench set aside the penalties imposed while upholding the service tax liability and interest thereof.

The appeal was disposed of.

(See 2016-TIOL-2285-CESTAT-MUM)