Mandap Keeper Service - Parking charges collected - whether includible in Assessable value?

PJ/Case Laws/2012-13/1034

Case: DESERT INN LIMITED Versus COMMISSIONER Of C. EX., JAIPUR

Citation: 2011 (23) S.T.R. 254 (Tri. - Del)

Issue:- Mandap Keeper service - Parking charges collected separately in relation to Mandap Keeper service are includable in Assessable value

Extended period of limitation invokable as amount of Parking charges not coming out from balance sheets that whether these charges are collected from same client or not.

Penalty cannot be imposed simultaneously under Section 76 and 78 of the Finance Act, 1994.

Brief Facts:- Appellants are providing services of Mandap Keeper and are paying Service Tax for the said activity. Apart from the Mandap, they are having a parking space for which they are charging separately for use of the parking space by their clients, who enjoyed the services of Mandap provided by the appellants. The department wants to charge Service Tax on the amount received in respect of parking charges for the space provided by the appellants to their clients using the Man- dap facility.

Accordingly, a Show Cause Notice was issued and demands were confirmed.

Aggrieved from the said order, the appellants filed this appeal against this order before the Tribunal.

Appellant’s Contention:- The Appellant submits that the appellants are issuing separate invoice for the parking charges and same are reflected in their balance sheet separately and the major portion of the demand is time-barred. Hence the demands are not sustainable.

Appellant further submitted that since it is a matter of interpretation, penalties are also not to be levied. In support of his contention, he placed reliance on Merwara Estates v. CLE, Jaipur reported in 2009 (16) S.T.R. 268 (Tri.-Del.).

Appellant also submitted that a demand has been raised on the basis of the balance sheet and the allegation of suppression has been made out.

Appellant submitted that the extended period is not invokable as suppression cannot be alleged on the basis of balance sheet as held by this Tribunal in the case of Martin & Harris Laboratories Ltd. v. CCE, Gurgaon reported in 2005 (185) E.L.T. 421 (Tn.Del.).

Respondent’s Contention:- Revenue submitted that the parking space has been provided by the appellants to their clients who are enjoying Mandap provided by the appellants. Without parking space Mandap cannot be enjoyed by the clients and it is not the case that the appellants are charging car parking charges from the persons who are parking the cars in that car parking space. It is admitted fact that these parking charges are collected by the appellants from their clients who enjoyed Mandap services. As the said facts have been suppressed by the appellants from the department, the adjudicating authority has rightly invoked the extended period and imposed penalty.

Reasoning of Judgment:- From the bare perusal of the definition of the services brought under tax vide sub-section 65(105)(m) of Finance Act, 1994, we find that any services provided by the assessee to their client in relation to Mandap Keeper is also to be included in the services of a Mandap Keeper. It is an admitted fact that the facility of car parking was made available to the clients who availed the services of the Mandap. It is also an admitted fact that the car parking charges were collected from the client who hired the Mandap and not from the persons who were parking their cars in that car parking. Hence these services of car parking was in relation to use of the Mandap. Hence, we are not in agreement with the Id. Advocate that this car parking was a separate service provided by the appellants to their client. Further, the case law cited by the Id. Advocate in the case of Merzoara Estates (supra) is not applicable to the facts of this case.

As in that case, apart from the Mandap, the rooms in the hotel were availed by the client. It is admitted fact that the rooms of the hotel is not necessary for use of the Mandap. But in this case which is in our hand, the car parking is a necessary facility for use of the Man- dap. Further the charges are payable by the person who uses the Mandap. Hence, the facts are distinguishable and the ratio in the case of Merwara Estates is not applicable to the facts of this case. Further, reliance placed by the Id. Advocate that they have clearly mentioned the car parking charges in their balance sheet separately which is a public document and the extended period is not invokable alleging suppression the facts in this case. In this case it was not coming out from the balance sheet whether these car parking charges are collected by the appellants from the same client using Mandap facility or not. Hence, the facts are distinguishable in the case of Martin & Harris Laboratories Ltd. (supra). It is admitted by the appellants that due to rush of vehicle the problem of parking is assuming utmost importance and the appellants who holds a banquet hall has to provide some parking space to be used for parking of vehicles by the guests of the client holding a function in the banquet hall, The said statement by the appellants also confirmed the view of this Tribunal that the car parking facility has been provided by the appellants in relation to the service provided for the Man- dap. The appellants have suppressed the fact from the department that these car parking charges are collected from the clients who are using the Mandap. Hence, the lower authorities has rightly invoked the extended period of limitation.

With regard to the penalties, the tribunal finds that in the impugned order both the penalties under Section 76 and 78 of the Finance Act have been confirmed and no option to the appellants has been given to pay 25% of the penalty within 30 days of the order of adjudication. Accordingly, we give this option to the appellants following the decision in the case of K.P. Pouches (P) Ltd. v. U01 reported in 2008 (228) E.L.T. 31 of Delhi High Court. Once penalty under Section 78 is imposed, penalty under Section 76 is not maintainable.

As discussed above, the demands confirmed by the lower authorities on account of service tax payable on car parking charges which are received in relation of Mandap Keeper Services are confirmed along with interest, only penalty under Section 78 is confirmed with an option to pay the entire demand along with interest and 25% of penalty under Section 78 of the Finance Act, 1994 following the decision in the case of K.P. Pouches wherein the Hon'ble Delhi High Court has given an option to pay 25% of the penalty within 30 days of the order of adjudication. It is pertinent to mention that if the appellants fails to pay the entire Service Tax demands along with interest and 25% of the penalty within 30 days of the communication of this order, the appellants shall be liable to pay 100% service tax as penalty confirmed by the adjudication order.

Decision:- Appeal disposed of accordingly.

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PJ/Case Laws/2012-13/1034

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