Whether room rent of hotel includible in the taxable value of Mandap Keeper Service?

PJ/Case Law/2013-14/2022

Case:- RAMBAGH PALACE HOTELS PVT. LTD. Vs COMMISSIONER OF CENTRAL EXCISE, JAIPUR

Citation:- 2013 (31) S.T.R. 480 (Tri. - Del.)

Brief facts:-The appellant was engaged in providing Mandap Keeper and Convention Service as defined under Section 65 of Chapter V of the Finance Act, 1994. During the period under dispute, they had discharged their service tax liability on the amount of Banquet charges, Banquet sundries and Banquet food. Inasmuch as the appellant had not discharge the service tax on the value of the room charges booked by them for the purpose of such marriage, conference, meetings etc., the Revenue entertained a view that such room charges are liable to be included in the value of mandap keeper service and accordingly, initiated proceedings against the appellant by way of issuance of SCN invoking longer period of limitation. The said SCN culminated into an order passed by the original adjudicating authority and upheld by the Commissioner (Appeals).

Appellant’s contentions:- The appellant denied the inclusion of the value of room rent in the taxable value of mandap keeper service on the premise that no function was organised in the rooms let out.

Respondent’s contentions:- The respondent held that the value of renting charges from customers in respect of the rooms booked by the appellants for the purpose of marriage, conference and meetings under the composite contract were required to be included in the value of the mandap keeper services and the service tax was required to be discharged on the entire value as according to him renting of rooms was covered under the category of Mandap Keeper Service. He further observed that rooms provided by the appellants even for temporary stay to the customers for organizing marriage conference and meetings was covered under the definition of Mandap Keeper and any consideration received by the appellant on this account was also includible in the consideration received against mandap keeper service. He also upheld the invocation of the longer period of limitation on the ground that the appellant had not intimated the fact of recovering the amount on account of renting of rooms and had suppressed the same with intent to evade payment of service tax.

Reasons of judgment:- After hearing both sides the Tribunal found that the Tribunal in the case of Merwara Estates v. C.C.E., Jaipur reported in 2009 (16)S.T.R.268 (Tri.-Del.)had held that renting of hotel rooms could not be held to be covered by the definition of ‘Mandap Keeper’ inasmuch as the hotel had an identity, personality and function quite distinguishable from that of a mandap. In any case, they found that the activity of giving hotel rooms to the customers, who might organise function in the hotel, was an activity entirely different from the mandap keeper activity. The definition of Mandap Keeper nowhere covers the temporary occupation of hotel rooms or the purpose of boarding, temporary residence. It was not disputed that no function was held in the hotel room which was used for the purpose of staying in the same. As such, they were of the view that the order of the lower authorities holding inclusion of the hotel rooms rent into the value of Mandap Keeper Service was not sustainable. The same was accordingly set aside and the appeal was allowed with consequential relief to the appellant.

Decision:- Appeal was allowed.

Comment:- The analogy drawn from the case is that renting of hotel rooms cannot be held to be covered by the definition of ‘Mandap Keeper’ inasmuch as the hotel has an identity, personality and function quite distinguishable from that of a mandap. Also, the definition of Mandap Keeper nowhere covers the temporary occupation of hotel rooms for the purpose of boarding or temporary residence within its ambit.

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PJ/Case Law/2013-14/2022

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