Whether the appellant was required to pay service tax on amount collected as donation on account of providing of Mandap keeper services?

PJ/Case Study/2018-19/134

CASE STUDY

Prepared By: Arundhati bajpai

Introduction: :-

M/S SINDHI WELFARE & MEDICAL SOCIETY(hereinafter referred to as appellant) are engaged in providing their premises consisting of one temple, 18 rooms, two halls and one garden for social and religious activities by general public.

A show cause notice no. V(ST) SCN/88/JDR/16/93 dated 03.01.2017 was issued to the appellant wherein it was alleged that they have not paid service tax amounting to Rs. 29,62,276/- under the category of ‘mandap keeper services’ during the period from April, 2011 to March, 2016.
Thereafter, reply to the show cause notice was filed vide letter having reference as PJ/EX/S-196/16-17/4647 dated 07.02.2017.
Thereafter, personal hearing for the case was convened on 19.09.2017 which was attended by their authorised representative, CA Pradeep Jain wherein the submissions made in their reply to the show cause notice were reiterated.
However, the submissions made in the reply were not adhered to and the impugned Order in Original no. 01/2017-ST dated 27.09.2017 was passed wherein the service tax demand was confirmed along with interest and penalties.
Aggrieved by the impugned Order in Original confirming the demand of service tax along with interest and penalties, the appellant filed the appeal before COMMISSIONER(Appeals). The appeal was decided in favour of assessee.
Relevant Legal Provisions:

The word ‘precincts’ is not a word of clear import which has a single, clear-cut meaning. Collin’s English Dictionary defines ‘precincts’ to mean “the surrounding region or area”.

In the New Shorter Oxford English Dictionary, the word ‘precinct’ is shown to have several meanings among which are the following :
“The area within the boundaries (real or imaginary) of a building or place; the grounds; the interior; esp. an enclosed or clearly defined area around a cathedral, college, etc. Also, the surroundings or environs of a place.”
In the Advanced Law Lexicon, 3rd Edition, by P. Ramanatha Aiyar, the word ‘precinct’ has been shown to have several meanings including a space enclosed by walls or other boundaries.

under section 65B (44) which reads as follows:-

(44) "service" means any activity carried out by a person for another for consideration, and includes a declared service.

Mega Exemption Notification no. 25/2012-ST dated 20.06.2012which reads as follows:-

5. Services by a person by way of-
(a) renting of precincts of a religious place meant for general public; or
(b) conduct of any religious ceremony;

Description of taxable service

Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises ( including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises

Conditions
CENVAT credit on any goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act, 1985 (5 of 1986) used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.

“Demand - Limitation - Suppression - Information not required to be supplied under law if not supplied does not amount to suppression - Proviso to Section 11A(1) of Central Excises and Salt Act, 1944.”
“Demand – Central Excise – Limitation –Invoking extended period of five years – something positive other than mere inaction or failure on part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before the period of six months.”

Issue Involved: Whether the appellant was required to pay service tax on amount collected as donation on account of providing of Mandap keeper services?

Brief Facts:
M/S SINDHI WELFARE & MEDICAL SOCIETY(hereinafter referred to as appellant) are engaged in providing their premises consisting of one temple, 18 rooms, two halls and one garden for social and religious activities by general public.

A show cause notice no. V(ST) SCN/88/JDR/16/93 dated 03.01.2017 was issued to the appellant wherein it was alleged that they have not paid service tax amounting to Rs. 29,62,276/- under the category of ‘mandap keeper services’ during the period from April, 2011 to March, 2016.

Assessee’s Contention:The impugned order in original confirming the service tax demand along with interest and penalties is wholly and totally erroneous and is liable to be set aside.
The impugned order has alleged that discrepancy was noticed in the accounts maintained by the appellant as the amount shown as receipt in their receipt books, amount of receipt shown in their bank statements and amount shown in Profit & Loss account, Balance Sheet/ITR were not found matching with each other. It is alleged that no clarification was put forwarded by the appellant during the course of personal hearing and rather it was stated that they are not maintaining any permanent register/records for booking of various parts of the premises of the society. It is alleged that the copies of the booking register of marriage garden/hall were not provided and it was clarified that the various discrepancies in issuing the donation receipts might have occurred due to uneducated office bearers/workers and many persons giving donations without obtaining receipts. In this respect, the appellant submits that the allegation as regards discrepancy is not tenable because as such, the service tax demand has been computed on the basis of figures mentioned in the Profit and Loss Account which considers higher amounts. Furthermore, as regards the discrepancy in the amount of donation receipts is concerned, it is submitted that they are unable to provide any explanation for the same as the donation receipt books are kept with the service tax department. Moreover, the discrepancy is mostly on account of wrongly taking donation receipts of other financial years because at times donation receipts are received in advance. Hence, the allegation of not giving any explanation for the said discrepancy is not tenable. Therefore, the impugned order in original is not at all tenable and deserves to be quashed.

The contention of the appellant that they were registered for charitable activities as society under section 12AA of the Income Tax Act, 1961 and since the rooms, hall, garden are inseparable part of the religious place, temple, confirmation of huge service tax demand on renting of religious premises is not sustainable has been rejected by the impugned order in original. The reliance placed on various decisions and clarification has also been rejected. It is alleged that in India, every home/premises/Institution/factory/Mall have temple inside the building area and some of them are also registered as society under section 12AA of the Income Tax Act, 1961 and if all of these are eligible for exemption under service tax, then service tax revenue would be zero. It is alleged that the meaning of ‘mandap’ is very wide in its coverage and includes all immovable properties let out for organizing social, official or business functions. It also includes within its scope places like Kalyana Mandaps or Marriage Halls, Banquet Halls, Conference Halls, etc. Therefore, the levy of service tax would apply in all these cases and the definition includes ‘Mandaps’ which are located or situated within the premises of any public place of worship such as temple, church, etc. and let out for charges. In this regard, the appellant submits that the allegation that merely because temple is situated in the premises will not lead to treating the premise as religious place is totally baseless. The appellant submits that temple occupies a significant portion of their premises and there is no doubt as regards the fact that temple is to be considered as religious place. The appellant reiterate that the entire premises is surrounded by a single boundary with temple being substantial part of it and this fact can be verified by the map of the premises. As such, therooms, marriage halls and the garden form ‘precincts’ of the temple which is a religious place, no service tax can be imposed. In order to understand the meaning of term ‘precincts’ reliance may be placed on the Apex Court decision given in the case of SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CUS & C.EX., M.P. [2006 (200) E.L.T. 357 (S.C.)]. In this case, the Hon’ble Supreme Court referred to the definition of the word ‘precincts’ under various dictionaries in order to arrive at conclusion that whether workshop in mining area for repair and maintenance of machineries is eligible for exemption under Notification No. 63/95-CE which provided exemption to goods manufactured in a mine. The reference made to various definitions is produced for the sake of reference as follows:-
The word ‘precincts’ is not a word of clear import which has a single, clear-cut meaning. Collin’s English Dictionary defines ‘precincts’ to mean “the surrounding region or area”.
In the New Shorter Oxford English Dictionary, the word ‘precinct’ is shown to have several meanings among which are the following :
“The area within the boundaries (real or imaginary) of a building or place; the grounds; the interior; esp. an enclosed or clearly defined area around a cathedral, college, etc. Also, the surroundings or environs of a place.”
In the Advanced Law Lexicon, 3rd Edition, by P. Ramanatha Aiyar, the word ‘precinct’ has been shown to have several meanings including a space enclosed by walls or other boundaries.
By placing reliance on the general meaning of the word ‘precincts’, it was held that workshop situated in a mine will be considered as precincts of mine and will also be eligible for the benefit of exemption. The appellant submit that the ratio of the above decision is clearly applicable to the case in hand as the rooms, halls and garden is situated within the boundaries of temple and is to be considered as a religious place. Therefore, no service tax is leviable on the renting of rooms, halls and gardens which are part of temple and the impugned order in original should be quashed.
In continuation to the above, the appellant submit that their premises as a whole is to be considered as religious place and this is supported by clarification issued by the Board vide Circular No. 200/10/2016-S.T., dated 6-9-2016wherein the meaning of precincts has been explained. The extracts from the circular is produced for the sake of convenient reference as follows:-
           The meaning of the word ‘precincts’ as given in various dictionaries is as
            under :-
Cambridge English Dictionary
“The area that surrounds a building or place, especially one with a wall around it.”
Random House Unabridged Dictionary
Precincts :
“Precincts, the parts or regions immediately surrounding a place; environs: the precincts of a town.”
“The ground immediately surrounding a church, temple, or the like.”
“A walled or otherwise bounded or limited space within which a building or place is situated.”
Black’s Law Dictionary
“The immediate neighborhood of a palace or court.”
In the case of CCE, Mangalore v. Dakshina Kannada Mogaveera Mahajana Sangha [2010 (17) S.T.R. 258 (Tri. - Bang.)], involving identical issue, CESTAT, Bangalore held after perusing the photographs of the temple complex that since the entire temple complex and marriage hall were enclosed by a boundary wall, the marriage hall was within the precincts of the temple and thus eligible for benefit of Notification No. 14/2003-Service Tax.
In view of the above, field formations may not take a restricted view of the word ‘precincts’ and consider all immovable property of the religious place located within the outer boundary walls of the complex (of buildings and facilities) in which the religious place is located, as being located in the precincts of the religious place. The immovable property located in the immediate vicinity and surrounding of the religious place and owned by the religious place or under the same management as the religious place, may be considered as being located in the precincts of the religious place and extended the benefit of exemption under Notification No. 25/2012-Service Tax, Sl. No. 5(a) dated 20-6-2012.
In light of the above clarification, there remains no room for doubt that no service tax is leviable on the renting of rooms, halls and garden which are located within the temple premises as there is exemption for such renting both in pre-negative list and post negative list era. Therefore, the impugned order in original is not at all tenable and is liable to be set aside.
Aligning with the above, the appellant further submit that the clarifications issued by way of issuance of circulars are binding on the departmental officers and they are bound to follow the circulars. This view is supported by the decision given by the Supreme Court in the case of COLLECTOR OF CENTRAL EXCISE, VADODARA VS DHIREN CHEMICAL INDUSTRIES [2002 (139) ELT 3 (SC)]. In this decision, hon’ble Supreme Court has held that the order passed by the revenue authorities in contravention to the clarifications given is void ab initio. In this case it was held as follows:-

“Departmental clarification - C.B.E. & C. Circulars binding on Revenue even if placing different interpretation then Supreme Court - Regardless of the interpretation that the Court have placed on the phrase “on which the appropriate amount of duty has already been paid”, if there are circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase, that interpretation will be binding upon the Revenue - Section 37B of Central Excise Act, 1944.”

The analysis of this decision makes it clear that while deciding any case, the Board Circulars are to be kept in mind. Similarly, the circular relied upon by the appellant which gives clarification on the issue that is prone to litigation should be followed and so the impugned order in original confirming the service tax demand should be set aside.
The impugned order has also placed reliance on the Circular No. 96/7/2007-ST dated 23.08.2007 wherein it was clarified that halls, rooms etc. let out by hotels/restaurants for consideration for organizing social, official or business functions are covered within the scope of ‘Mandap’ and service tax is payable on the same and section 67 of the Finance Act, 1994, as amended provides that the value of taxable service shall be the gross amount charged by the Mandap Keeper for such service rendered by him. Thus, the value of taxable service is the gross amount charged by the ‘Mandap Keeper’ from the client for use of the ‘Mandap’ including the facilities provided to the client in relation to such use and also the charges for catering, if any. The service tax would apply not only on the hire charges for the ‘Mandap’ but also on the charges for electricity, whether on actual basis or otherwise, charged to the customers. The tax is to be collected on the whole amount even if separate bills are issued one for the rental and other for electricity charges. Donation is also a form of consideration for letting out the ‘Mandap’ and hence would attract service tax. In this regard, the appellant submits that on perusal of the circular, it is found that it simply clarifies the meaning of mandap keeper service and it taxability. The circular nowhere mentions that donation is also form of consideration for letting out the ‘mandap’ and would attract service tax and the impugned order has erroneously made such a contention. The appellant submits that in order to levy service tax, it is necessary that consideration is received for the provision of said service which is not the present case. The appellant reiterate that they are engaged in charitable activities and are also registered under section 12AA of the Income Tax Act, 1961 and are working on ‘no profit no loss’ basis. The appellant submit that the society formed meets its expenses from the donations received voluntarily from various donors. The appellant submit that they do not charge any amount for letting of their premises and so no consideration is involved in their case. The appellant submit that in order to levy service tax, consideration is a pre-requisite and this is clear from the definition of service given under section 65B (44) which reads as follows:-
“(44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include—…..”
Thus, in simple terms, the word “service” means –

any activity
for consideration
carried out by a person for another

If ALL of the criteria specified at serial no. (i) to (iii) above are satisfied, the activity will fall under the definition of service and service tax would be levied unless otherwise exempted. The first component is “activity” which is wide enough to cover all types of work or operation. The third essential element is that it should be carried out by one person to another, i.e. there should be two persons involved in that activity. The second component, i.e. “consideration” is the most crucial one. If there is an activity carried out by one person to another but the “consideration” is not there, it cannot fall in purview of term “service”. The appellant submit that since they do not charge any amount for letting out their premises, the element of consideration is absent and consequently, no service tax can be levied on them.
The appellant further submit that for the period prior to 01.07.2012, the provisions of section 66 and 67 support the view that service tax can be levied only on gross amount charged for the service provided. It is submitted that the charging section 66 stated that there shall be levied a tax at the rate of twelve per cent of the value of taxable services. Furthermore, the section 67 pertaining to valuation of taxable services states that value of taxable service in case where provision of service is for consideration in money shall be the gross amount charged by the service provider for such service provided or to be provided by him. The appellant submit that even in positive list tax regime, service tax was leviable only on the amount charged by service provider for services provided. In the present case, since no amount has been charged for the service of letting out of premises, no service tax is leviable and the impugned order in original is liable to be dropped. A specimen copy of donation receipt issued by them was enclosed with the reply to the show cause notice. Hence, in the absence of consideration, service tax demand is not at all tenable and the impugned order is liable to be set aside.
The impugned order has also relied upon the decision given in the case of M/s Tamilnadu Kalyana Mandapam Owners Associations V/s UOI [2006 (3) S.T.R. 260 (S.C.)] deciding the issue in respect of levy of service tax on Mandap Keeper’s Services. In this regard, the appellant submits that erroneous reliance has been placed by the learned adjudicating authority on the above cited decision as the constitutional validity to levy service tax on mandap keeper services was challenged in the said decision. The legislative competence of the Parliament to levy tax on mandap keeper services was being challenged in the relied upon case which is not the issue under consideration for the present appeal. The appellant submits that the issue involved in the present case is availment of benefit of exemption admissible to letting of precincts of religious premises by the appellant which is alleged to be leviable to service tax under the category of ‘mandap keeper service’. As such, the issue under consideration is totally different and the reliance placed on the above cited decision is not at all tenable. Hence, the impugned order in original is not sustainable and the same deserves to be set aside.
The impugned order has also rejected the applicability of exemption contained under entry no. 5 to the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012. Furthermore, reliance placed on the decision given in the case of CCE, Mangalore Vs Dakshina Kannada Mogaveera Mahajana Sangha [2010 (17) S.T.R. 258 (Tri.-Bang)] by stating that it is not applicable as the premises of the appellant is not temple but a commercial building comprising 18 rooms, two hall and a small temple to mislead the government exchequer. In this regard, the appellant reiterate that their premises is not commercial building and rather is part and parcel of the temple with respect to which no service tax is leviable. The appellant submits that they are rightly eligible for claiming the benefit of exemption and the rejection of reliance placed on the decision of CCE, Mangalore Vs Dakshina Kannada Mogaveera Mahajana Sangha [2010 (17) S.T.R. 258 (Tri.-Bang)] without assigning proper reasons is not at all proper. The appellant submits that they were not liable to pay any service tax as there was specific exemption for mandap keeper services provided in precincts of a religious place vide Notification No. 14/2003-ST dated 20.06.2003 which reads as follows:-
In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services provided to any person by a mandap keeper for the use of the precincts of a religious place as a mandap, from the service tax leviable thereon, under section 66 of the said Act.
Explanation.-For the purpose of this notification, "religious place" means a place which is meant for conduct of prayers or worship pertaining to a religion.
This notification shall come into force on the 1^st day of July, 2003.
The appellant submit that this notification clearly provided exemption to the mandap keeper services provided in precincts of a religious place as mandap and since they have also provided mandap keeper services for the use of precincts of religious place, they are entitled for the said exemption. It is also worth noting that this exemption is prevalent till 30.06.2012 as this notification was rescinded vide Notification No. 34/2012-ST dated 20.06.2012 which was made applicable with effect from 01.07.2012. Therefore, the exemption was granted from 01.07.2003 to 30.06.2012. The appellant submit that since the above exemption was prevalent during the period from 01.04.2011 to 30.06.2012, the service tax demand confirmed vide the impugned order in original for the period prior to introduction of negative list regime is not at all sustainable and is liable to be dropped.
Aligning with the above, the appellant also wish to place reliance on the decision given by the Hon’ble Bangalore Tribunal in the case of C.C.E., MANGALORE VERSUS DAKSHINA KANNADA MOGAVEERA MAHAJANA SANGHA [2010 (17) S.T.R. 258 (Tri. - Bang.)]wherein it was held that marriage hall located within the precincts of temple will be eligible for the benefit of exemption under notification no. 14/2003-S.T. dated 01.07.2003. The synopsis of the case is as follows:-
Mandap Keeper service - Exemption - Marriage hall held as located within precincts of temple in impugned order- Revenue contending that marriage hall not within temple premises but in temple’s property - Photographs showing temple complex and marriage hall enclosed by boundary wall indicating entire property within temple premises of the trust - Marriage hall within precincts of religious place i.e. temple - Exemption under Notification No. 14/2003-S.T. admissible - Section 93 of Finance Act, 1994.[para 6.1]

In light of the clear cut decision in their favour, the benefit of the decision should be extended to the present case and the impugned order in original should be set aside.
As regards the service tax demand for the period from 01.07.2012 to 31.03.2016 is concerned, the appellant submit that the same pertains to the negative list tax regime wherein also there is exemption for such services under entry no. 5 to the Mega Exemption Notification no. 25/2012-ST dated 20.06.2012 which reads as follows:-
5. Services by a person by way of-
(a) renting of precincts of a religious place meant for general public; or
(b) conduct of any religious ceremony;
The appellant submit that in the negative list era, renting of precincts of religious place meant for general public has been exempted. The appellant submit that as already detailed by them in the preceding paragraphs, the rooms, marriage halls and the garden are situated adjacent to the temple and are within the boundary of their premises. Consequently, the renting of rooms, marriage halls and garden tantamounts to renting of precincts of religious place which is meant for general public. Therefore, the benefit of exemption contained in entry no. 5 (a) of the Mega Exemption Notification is admissible to them and the impugned order in original confirming service tax demand for the period post introduction of negative list tax regime should be set aside.
The appellant further submit that post negative list tax regime, every service is leviable to service tax unless covered in the negative list under section 66D or the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012. The appellant submit that the concept of specified services has been done away and there is no category like ‘Mandap Keeper Service’ in the negative list tax regime. This view is fortified by the contents of the Abatement Notification no. 26/2012-ST dated 20.06.2012 at serial no. 4 which reads as follows:-

*S.No.*	*Description of taxable service*	%	*Conditions*
4.	Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises ( including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises	70	(i) CENVAT credit on any goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act, 1985 (5 of 1986) used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.

The appellant submit that the above entry of exemption does not mentions ‘Mandap Keeper Service’ and so it is clear that there is no such service in the negative list tax regime. On the contrary, the abatement notification no. 01/2006-ST dated 01.03.2006 applicable for the period prior to 01.07.2012 clearly mentioned the fact that abatement under serial no. 1 of the notification applied to ‘The use of mandap including the facilities provided to the client in relation to such use and also for the catering charges’. The appellant submit that since under the negative list, the concept of specified service being ‘Mandap Keeper Service’ has been dispensed with, the service tax demand under the category of ‘Mandap Keeper Services’ for the period post 01.07.2012 is not tenable because the appellant are rightly entitled for exemption contained in entry no. 5 of the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012. Hence, the impugned order in original should be quashed.
As regards various decisions relied by the appellant in their defence, the impugned order has held that each case is based on its own facts and circumstances. It is contended that one cannot make conclusion on the basis of selective picture but have to see the full picture to draw a justified conclusion, therefore the spirit of ‘levy of service tax’ is to understand not only the definition but also the basis of legislative intention and imperative. It is held that the appellant has decided the concept of service tax on the basis of hypothesis of small temple inside the premises but findings of the adjudicating authority are based on non-payment of service tax on the amount collected from the customers on account of providing mandap keeper service and service tax not paid to the government. It has been held that unless the facts of the relied upon cases are shown to be identical to the facts of the present case, any reliance on the same would not be in true spirit of judicial discipline and not applicable to the instant case. In this regard, it is submitted that for relying upon a case, the facts need not be identical; however, the analogy drawn while deciding the case should be applicable. In the instant case, though majority of the decisions were squarely applicable to their case, some were slightly different in facts and circumstances, however, the ratio of even those decisions was applicable on the basis of principle of ratio decidendi. All of such decisions were discussed and analyzed bringing out the ratio laid down by each judgment and benefit of those decisions was equally extendable by applying the principle of ratio decidendi which means that while interpreting any decision, ratio laid down by it has to be seen rather than going rigidly by the facts and circumstances. The ratio decidendi is "the point in a case that determines the judgment" or "the principle that the case establishes". In other words, ratio decidendi is a legal rule derived from, and consistent with, those parts of legal reasoning within a judgment on which the outcome of the case depends. It has been held by the Gujarat High Court that it is the ratio decidendi that forms a binding precedent, not the entire facts and circumstances of the case. This decision has been given in the following case:-

DHRANGADHRA MUNICIPALITY, DHRANGADHRA AND OTHERS VERSUS DHRANGADHRA CHEMICAL WORKS LTD. AND OTHERS [1988 (35) E.L.T. 88 (GUJARAT)]

Precedent - Ratio decidendi constitutes a precedent and not the entire contents of a judgment.
- It is not everything said by a judge when giving judgment that constitutes a precedent. The only thing in a judge’s decision binding a party is the principle upon which the case is decided and for this reason, it is important to analyse a decision and isolate from it, the ratio decidendi. [A.I.R. 1979 S.C. 1384 cited; XXIV (1) G.L.R. 1 & A.I.R. 1987 S.C. 1073 referred]. [para 27]
From the above decision, it is ample clear that while interpreting any decision, one has to see the ratio laid down by the Court rather than by looking into the facts and circumstances. If the ratio decidendi is applicable, the benefit of decision is equally extendable to the assessee. However, in the instant case, the impugned order has simply brushed aside these cases by alleging that the facts and circumstances of these cases are not applicable in the given case. Such an interpretation is not tenable and is liable to be set aside.
The impugned order has held that the appellant’s contention that they were under bonafide belief regarding non-payment of service tax is far from truth. It is held that the appellant did not take registration for service tax on time and even they did not paid the service tax after getting registration belatedly on 03.06.2014 and also did not file periodical returns. Thus, it was not possible for the scrutinizing officer to detect the nature of such amount of output tax. It is alleged that the appellant has thus, suppressed from the department regarding the consideration collected from their customers on account of providing Mandap Keeper Services. It is contended that during the course of the scrutiny of financial records of the assessee and on demand of further details, the department came to know about the said facts. It goes without saying that had the appellant not been examined, department could have never known about consideration on account of mandap keeper services on which no service tax was paid. In this regard, the appellant submit that there was no suppression of facts on their part because the services provided by them are exempted and they were not liable to pay any service tax. Moreover, the eligibility of service tax exemption has been confirmed by decision given by Hon’ble Bangalore Tribunal in the case of C.C.E., MANGALORE VERSUS DAKSHINA KANNADA MOGAVEERA MAHAJANA SANGHA [2010 (17) S.T.R. 258 (Tri. - Bang.)].Not only this, the above view is also supported by Clarification issued by the Board vide Circular No. 200/10/2016-S.T., dated 6-9-2016. As such, there was bonafide belief regarding exemption from service tax and larger period of limitation is not available to the revenue authorities. The appellant further submit that since they were solely providing exempted services, they had not filed returns and as such, there is no suppression of facts. Further, there is no provision in the service tax law which states that each and every act and procedure followed by the assessee should be intimated to department and that too suo motu as alleged in the impugned show cause notice. It has been held by hon’ble Gujarat High Court in the case of APEX ELECTRICALS PVT. LTD. VERSUS UNION OF INDIA [1992 (61) E.L.T. 413 (Guj.)] that non-furnishing of the information not required under law does not amount to suppression. The verdicts of hon’ble High Court are given as follows:-

“Demand - Limitation - Suppression - Information not required to be supplied under law if not supplied does not amount to suppression - Proviso to Section 11A(1) of Central Excises and Salt Act, 1944.”
Similar decision was given in the following cases:-

GUFIC PHARMA VS. CCE - 1996 (85) ELT 67 (T) [AFFIRMED BY SUPREME COURT AT 1997 (93) ELT A186]
PROLITE ENGINEERING CO. VS UNION OF INDIA [1995 (75) ELT 257 (GUJ.)]
UNIQUE RESIN INDUSTRIES VS. CCE - 1995 (75) ELT 861 (T)

In all the above cases, it was held that the information not required to be submitted under law, if not submitted, will not amount to suppression of facts. Thus the impugned show cause notice invoking the extended period of limitation on the grounds of non-furnishing of information (that was not required to be submitted under law), is not sustainable and is liable to be set aside.

The impugned order has cited the decision of M/s Mehta & Co. [2011 (264) ELT 481 (SC)] in which it was held that the period of five years was to be calculated from the date of information to the department. In other words, this decision stated the manner in which calculation of five years will be done; there was no dispute that the extended period was invokable. Further, in this case, this was clear cut case of suppression and the department had come to know about the manufacture of furniture from the information provided by the buyer. This decision is not applicable in the instant case. In this case, the appellant has contested that the extended period is not invokable at all as the appellant had availed the benefit of exemption contained in the Notification No. 14/2003-ST dated 20.06.2003 and Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 whereby renting of precincts of religious place is not leviable to service tax. Moreover, they have also relied upon the decision given in the case of CCE, MANGALORE VERSUS DAKSHINA KANNADA MOGAVEERA MAHAJANA SANGHA [2010 (17) S.T.R. 258 (TRI.-BANG)] which confirmed service tax exemption to marriage hall located within the precincts of temple. Therefore, in the case of appellant, this decision is not applicable at all and the demand is barred by the clause of limitation. Therefore, the impugned order has wrongly placed reliance on this decision and is liable to be quashed.
The submissions made in the forgoing paras make it ample clear that there was no misstatement or willful suppression of facts on the part of appellant, thus, the show cause notice is barred by the clause of limitation. To invoke the extended period, the fraud, collusion or willful misstatement should be there. It was held in the case of RAINBOW INDUSTRIES V/S. CCE [1994 (74) ELT 3 (SC)] that for invoking the extended period, two ingredients are essential – (i) Willful suppression, mis-declaration, etc. and (ii) Intention to evade payment of duty. In absence of both of these extended period cannot be invoked. This has also been held in the case of CHEMPHAR DRUG & LIMITS REPORTED IN (2002-TIOL-266-SC-CX) wherein hon’ble Supreme Court held as under:-

“Demand – Central Excise – Limitation –Invoking extended period of five years – something positive other than mere inaction or failure on part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before the period of six months.”

Thus, in the light of above decision, extended period cannot be invoked blindly in every case. Where the assessees have been acting in the boundaries of law, the extended period cannot be invoked. Similar decision is given in the following cases:-

PUSHPAM PHARMACEUTICALS COMPANY VS. CCE, MUMBAI reported in ( 2002-TIOL-235-SC- CX )

“Central Excise – Demand – Suppression of facts – Words and phrases – Where facts are known to both the parties the omission by one to do what he might have done and not he must have done, does not render it suppression – Suppression of facts must be deliberate to escape from payment of duty.”

NESTLE INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH [2009 (235) E.L.T. 577 (S.C.)]

Demand - Limitation - Intermixture of vitamins cleared by assessee for more than 20 years prior to issue of show cause notice - Assessee offered to demonstrate but Department not availed opportunity to find out whether manufacture was involved - Extended period invocable only when there is positive act other than mere inaction or failure on the part of manufacturer and there must be conscious or deliberate witholding of information by manufacturer as held in 1989 (43)E.L.T.195 (S.C.) and 1989 (40)E.L.T.276 (S.C.) - Tribunal order on non-sustainability of invocation of extended period, upheld - Proviso to Section 11A of Central Excise Act, 1944. [para 17]

COMMISSIONER OF C. EX., BANGALORE VERSUS KARNATAKA AGRO CHEMICALS [2008 (227) E.L.T. 12 (S.C.)]

Demand - Limitation - Controversy regarding classification of micronutrient fertilizers not settled though these circulars were issued by Department - Conflict of views between Ministry of Finance and Ministry of Agriculture - Extended period of limitation not invocable - Section 11A of Central Excise Act, 1944. [para 27]

Castings — Machine parts — Milling, drilling and boring carried out on rough castings — Exemption under Notification No. 223/88-C.E., dated 23-6-1988 not available (2) Demand — Limitation — Department when aware of assessee’s activities at all times — Extended period of limitation not invokable (3) Appeal — Additional evidence — Documents not placed before adjudicating authority nor necessary for passing order in the case, not admissible

ILAVIA ENTERPRISES VERSUS COLLECTOR OF C. EX., JAIPUR [1997 (91) E.L.T. 26 (S.C.)]

Demand - Limitation - Manufacture of goods commenced on 1st August, 1991 but requisite declaration filed in April, 1992 - Show Cause Notice issued on 10-5-1993 for the period 1-8-1991 to 30-12-1992 - HELD : No suppression of facts on the part of the assessee, nor they have acted with any mala fide intention - Demand to be restricted to six months period preceding to the date of Show Cause Notice - Extended period of limitation not invokable - `Shikakai’ bath powder whether an Ayurvedic medicine or cosmetic - Section 11A of the Central Excise Act, 1944.

COLLECTOR OF CENTRAL EXCISE VERSUS H.M.M. LIMITED [1995 (76) E.L.T. 497 (S.C.)]

Demand - Limitation for extended period not invokable unless show cause notice puts assessee to notice specifically as to which of the various commissions or omissions stated in the proviso to Section 11A(1) of Central Excises & Salt Act, 1944 had been committed. [para 2]
Demand - Limitation for extended period - Non-declaration of waste/ by-product in classification list - Inference of intention to evade payment of duty not drawable automatically - Show cause notice must contain an averment to that effect pointing out specifically as to which of the various commissions or omissions stated in the proviso to Section 11A(1) of Central Excises & Salt Act, 1944 had been committed by assessee and adjudicating authority must specifically deal with assessee’s contention in rebuttal thereof. [para 2]
Penalty not imposable unless Department is able to sustain its demand show cause notice which was under challenge on the ground of limitation - Rules 9(2) and 173Q of Central Excise Rules, 1944.

COSMIC DYE CHEMICAL VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [1995 (75) E.L.T. 721 (S.C.)]

Demand - Limitation - Intent to evade duty must be proved for invoking proviso to Section 11A(1) of Central Excises & Salt Act, 1944 for extended period of limitation - Intent to evade duty built into the expressions “fraud” and “collusion” but “mis-statement” and “suppression” being qualified by immediately preceding words “wilful” and “contravention of any of the provisions of this Act or rules” being qualified by the immediately following words “with intent to evade payment of duty”,.
- It is, therefore, not correct to say that there can be a suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Mis-statement or suppression of fact must be wilful. [para 6]
Demand - Limitation - SSI manufacturer not including value of clearances of fully exempted goods in his declaration for previous financial year due to bona fide impression gained from two High Court judgments which held that fully exempted goods were not includible in the definition of “excisable goods” as defined in clause (d) of Section 2 of Central Excises & Salt Act, 1944 - Mis-statement or suppression of fact in the SSI declaration cannot be called wilful - Extended period of limitation not invokable - Proviso to Section 11A(1) ibid. [para 8]

Words and phrases - “Wilful” means intent to evade duty - Proviso to Section 11A(1) of Central Excises & Salt Act, 1944. [para 6]

Words and phrases - “Fraud” and “collusion” - Intent to evade duty is built into these very words - Proviso to Section 11A(1) of Central Excises &Salt Act, 1944. [para 6]

COMMISSIONER OF C. EX., MUMBAI VERSUS S. NARENDER KUMAR & CO. [2011 (267) E.L.T. 577 (S.C.)]

Demand - Limitation - Extended period, invocation of - Assessee regularly filing classification list with Department and same approved over the years - SCN issued invoking extended period after issuance of Circular subsequently regarding classification of Jaljira masala - Case identical to Apex Court decision in 2005 (188)E.L.T.149 (S.C.) and 2005 (180)E.L.T.300 (S.C.) where also classifications approved by Department from time to time and where it was also held that Department could have called upon assessee to produce catalogues in case of some confusion/doubt - No infirmity in Tribunal’s order holding absence of wilful suppression - Extended period not invocable - Proviso to Section 11A(1) of Central Excise Act, 1944. [paras 6, 8]

PADMINI PRODUCTS V/S COLLECTOR OF CENTRAL EXCISE– reported in [1989 (43) ELT 195 (SC)]:-

“Demand- Limitation- Extended period of 5 years inapplicable for mare failure or negligence of the manufacturer to take out license pr pa duty when there was scope for doubt that goods were not dutiable – Dutiability of goods in doubt because to Trade notice Scope of fraud, collusion, willful mis-statement or suppression of facts or contravention of rule with intent evade duty- Rule 9(2) of the Central Excise Rules, 1994 and Section 11 S of Central Excise and Salt Act, 1994.when in view of the trade notice there is scope for believing that the goods were entitled to exemption and consequently no licence is required to be taken out, then the extended period of limitation for demand under Section 11 A is inapplicable. Mere failure or negligence on the part of the manufacturer either not to take out a licence or not pay duty in case where there was scope for doubt, does not attract the extended limitation. Unless there is evidence that the manufacturer knew that goods were liable to duty or he was required to take out of licence. For invoking extended period of five limitation duty should not had been said, short levied or short paid erroneously refunded because of either any fraud, collusion or willful mis-statement or suppression of facts of facts or contravention of any provision of the Act or Rules made there under. These ingredients postulate a positive act, therefore, failure to pay duty or take out a licence is not necessary due to fraud or collusion or willful mis-statement or suppression of facts contravention of any provisions of the Act. Likewise suppression of facts is not failure to disclose to the legal consequences of a certain provision.”

TAMIL NADU HOUSING BOARD V/S COLLECTOR OF CENTRAL EXCISE, MADRAS[1994 (74) ELT 9 (SC)]:-

Demand – Limitation for extended period invokable only if existence of both situations (1) suppression, fraud, collusion etc. and (2) intent to evade payment of duty proved- initial burden on Department- once department discharges such burden, it shifts and then applicability of provision to Section 11A(1) of Central Excise and Salt Act, 1944 is to be construed liberally.
In the above cases, it was held that mere inaction would not be a valid ground for invoking the extended period of limitation. There should be deliberate withholding of information with an intent to evade payment of duty without which extended period is not invokable. This has not been proved by the impugned show cause notice. As such, the benefit of these decisions is extendable to the appellant and the impugned show cause notice is liable to be quashed for wrongly invoking the extended period of limitation.
Aligning with above, it is reiterated that the impugned order has failed to discuss and distinguish the case flaws cited by the appellant. Therefore, it has proved to be a non speaking and non reasoned order which is not justified in view of following decision:-

STATE OF HIMACHAL PRADESH VS SARDARA SINGH [2008-TIOL-160-SC-NDPS]:-

Even High Courts are required to pass speaking reasoned orders - The "inscrutable face of a sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance. The manner in which appeal against acquittal has been dealt with by the High Court leaves much to be desired. Reasons introduce clarity in an order. On plainest consideration of justice, the High Court ought to have set forth its reasons, howsoever brief, in its order indicative of an application of its mind, all the more when its order is amenable to further avenue of challenge. The absence of reasons has rendered the High Court order not sustainable. The requirement of indicating reasons in such cases has been judicially recognized as imperative. Judicial discipline to abide by declaration of law by this Court, cannot be forsaken, under any pretext by any authority or Court, be it even the Highest Court in a State, oblivious to Article 141 of the Constitution of India. Reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at. Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the "inscrutable face of the sphinx", it can, by its silence, render it virtually impossible for the Courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made, in other words, a speakingout. The "inscrutable face of a sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance: SUPREME COURT;
In view of above decisions, an order passed without discussing and distinguishing the submissions given by appellant is void ab initio. Therefore, extending the benefit of these decisions, the impugned order, being a non speaking and non reasoned order, deserves to be quashed.

It is further submitted that the impugned order has not discussed and distinguished the case laws cited by the appellant. However, it has cited a number of other decisions of hon'ble Supreme Court and Tribunals. In this regard, it is submitted that these decisions are also not identical to the facts and circumstances of the case. Therefore, the impugned order is contradicting its own words given while distinguishing the case laws cited by the appellant. It has not accepted the decisions cited by the appellant by alleging that the facts of these cases are not identical to the given case. On the other hand, it has itself relied on the decisions the facts of which are not identical to the appellant's case. Such an approach is not justified. It is submitted that the impugned order has relied upon the decision given in the case of Mathania Fabrics Vs CCE, Jaipur [2008 (221) ELT 481 (SC)] and Salasar Dyg & Ptg. Mills (P) Ltd., Vs CCE, Surat [2009 (235) ELT 93 (Tri-Ahmd.)]. In this regard, it is submitted that these decisions were passed for deciding the manner of computation of extended period of limitation. In this regard, it is submitted that this is not the case here. The manner of computation of extended period is not contested. Therefore, these decisions are not applicable in the instant case. As such, the reliance placed on these two decisions is not sustainable and is liable to be quashed.
The impugned order has further relied upon the decision of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD-I VERSUS M. SQUARE CHEMICALS [2008 (231) E.L.T. 194 (S.C.)]. The impugned order has wrongly placed reliance on this decision as it is passed against the department and this involves the manner of computation of extended period. Similarly, in the case of Nazareth Metal Vs Commissioner of C.Ex., Mumbai-II [2006 (205) ELT 998 (Tri. Mumbai)] also, the decision was given against the department and it was held in this case that the extended period is not invokable. Relying on the decisions which are passed against the department and in favour of assessees shows how casually the impugned order has been passed. Such an order is not sustainable and is liable to be quashed.
It is further submitted that the impugned order has further relied on the decision of Associated Cement Companies Ltd., Vs CC [2001 (128) ELT 21 (SC)]. In this decision the issue was lower valuation of imported goods. The facts narrated in the order showed that the value of goods so imported was declared at very low price which is clearly a case of misstatement which attracts the extended period of limitation. In the instant case, there was no misstatement or suppression of facts and rather it is case of availment of benefit of exemption as stated in the preceding paragraphs. Accordingly, the provision of extended period of limitation is not invokable and the impugned order deserves to be set aside.
The impugned order has further relied on the decision given in the case of Century Tiles Ltd. V/s Commissioner of Central Excise, Ahmedabad [2009 (236) ELT 583 (Tri.-Ahmd)]. In this decision, the transaction details were not submitted to the department. Therefore, the extended period was invoked. Further, this decision was distinguished in COMMISSIONER OF C. EX., AURANGABAD VERSUS YESHWANT INDUSTRIES [2014 (313) E.L.T. 667 (TRI. - MUMBAI)]. Therefore, the reliance placed on the above decision is not sustainable and is liable to be quashed.
The impugned order has further relied upon the decision given in the case of Chemfab Alkalis Ltd. vs CCE Pondicherry [2010 (251) ELT 264 (Tri.-Chennai)]. In this decision, the extended period was invoked as the details of exempted products were not submitted to the department. This is not the case here as the appellant has not suppressed any information that was legally required to be furnished under law. As such, this decision cannot be applied in the given case.
The impugned order has further relied on the decision given in the case ofCCE., Surat-I vs Neminath Fabrics Pvt. Ltd. [2010 (256) ELT 369 (Guj.)]. In this case, the extended period was held as invokable as the ingredients of the proviso are satisfied. In the instant case, the impugned order has failed to prove which of the ingredients mentioned in the proviso is satisfied. Since it is not proven, the requirements imposed by the section are not satisfied. Therefore, the ingredients of above section are not satisfied and impugned order has wrongly placed the reliance on the above mentioned decision.
The impugned order has confirmed the imposition of penalty by holding that since the appellant is liable to pay the service tax alongwith interest; the penalty is also payable. It is worthwhile to mention here that no penalty can be imposed under Section 78 of the Finance Act, 1994 if there was no willful suppression or intention to evade payment of service tax on the part of the assessee. The impugned order has not been able to clearly establish that any of these elements were in existence in their case. On the other hand, they have proved their bonafides as categorically discussed here above. It is submitted that when no such element was there, the penalty under Section 78 of the Act is not required to be imposed on the appellant. It has been held in the case of HINDUSTAN STEEL V. STATE OF ORISSA [1978 2 ELT J 159 (SUPREME COURT)] that an order imposing penalty for failure to meet statutory obligation is a result of proceedings which are quasi judicial in nature and penalty should not ordinarily be imposed unless the person acted deliberately in defiance of law or was guilty of misconduct or dishonest or acted in conscious disregard of his obligation. It is further held in the case of ORIENT CERAMICS AND INDUSTRIES [1987 (32) ELT 218 (I)] that words ‘with intent to evade payment of duty’ are very significant and unless and until the intention to evade payment of tax is proved on part of assessee, no penalty can be imposed. Similar view has been taken by hon’ble High Court in the following case:-

Commissioner of Central Excise v/s ESS ESS Engineers [2011 (23) S.T.R. 3 (P & H)]:-

“The High Court observed that the Tribunal had held that short payment was mainly due to the appellant’s understanding that they were not liable to pay service tax on fabrication and dismantling charges. As regards penalty under Section 78 is concerned, the same is imposable in a case where service tax has not been levied or paid or has been short levied or short paid or erroneously refunded, by reason of fraud; or collusion; or willful misstatement; or suppression of facts; or contravention of any of the provisions of this Chapter or of the rule made thereunder with intent to evade payment of service tax. It was noted that the fact of non-payment of service tax was discovered during the course of audit.

The High Court held that the submission of Revenue that appellant was guilty of mis-declaration was not acceptable as the Tribunal had given a finding of fact that assessee did no have requisite mens rea to evade payment of service tax. The assessee had duly paid the service tax with interest and also made full and true disclosure in the return. The finding of fact of Tribunal was not shown to be perverse in any manner. Hence no question of law arises.”
Thus, mens rea is an essence of invoking the penal provisions. Reliance is also placed on the following judgments:-

2010 (258) ELT 465 (SC) – Sanjiv Fabrics
2007 (207) ELT 27 (P &H) – UT Ltd
2007 (5) STR 251 (P & H) – Kamal Kapoor
2009 (238) ELT 3 (SC) – Rajasthan Spinning & Weaving Mills
2009 (238) ELT 209 (P&H) – J. R. Fabrics
2009 (238) ELT 226 (Mad) – Thirumala Alloys Castings
2008 (228) ELT 31 (Del) – K. P. Pouches

In view of these judgments, no penalty can be imposed unless mens rea or intention to evade payment of duty/service tax is proved. Also, the impugned order has not otherwise proved the malafide intention; therefore, in view of these judgments the impugned order is liable to be quashed.
In continuation to the above, it is submitted that the issue involved herein is that of interpretation of legal provisions and where interpretation of legal provisions is involved penalty cannot be imposed on the assessee. This contention has been upheld in the case of UNIFLEX CABLES LTD V/S COMMISSIONER OF CENTRAL EXCISE, SURAT-II [2011-TIOL-85-SC-CX]= [2011 (271) E.L.T. 161 (S.C.)] wherein it was held as under:
Central Excise – No penalty in a case of interpretational nature: The Commissioner, himself in his order-in-original has stated that the issue involved in the case is of interpretational nature, Keeping in mind the said factor, the Commissioner thought it fit not to impose harsh penalty and a penalty of an amount of Rs. 5 lakhs was imposed on the appellant while confirming the demand of the duty. Therefore, in the facts and circumstances of the present case, penalty should not have been imposed upon the appellant.
Thus, hon’ble Supreme Court has held that penalty is not imposable in the issues involving the interpretation of legal provisions. Similar decision has been given in the following cases:-
M/S ITEL INDUSTRIES LTD V/S CCE, CALICUT [2010-TIOL-236-CESTAT-BANG]= [2010 (251) E.L.T. 429 (TRI.-BANG)]. In this case it was held that no penalty was imposable when there is a question of interpretation involved.
Similarly, in the case of CCE, LUCKNOW V/S M.S ROSA SUGAR WORKS [2010-TIOL-82-CESTAT-DEL] it was held as under:
Central Excise – Cenvat – Penalty – When the question involved is interpretation of the provisions of law imposition of penalty is not warranted: DELHI CESTAT;
In the case of M/S HINDUSTAN LEVER LTD V/S CCE, LUCKNOW [2009-TIOL-1795-CESTAT-DEL] It was held as under:
Penalty – dispute related to the interpretation of statutory provisions and it did not disclose intention to evade the payment of duty and therefore, there was no justification for imposition of penalty in the matter: DELHI CESTAT;
Further, in the case of M/S GHCL LTD V/S CCE, BHAVNAGAR [2009 (16) STR 588(TRI-AHMD.)] it was held as under:
“…As the matter involves interpretation and eligibility, penalties set aside….”
Thus, the benefit of the above cited judgments is extendable and the impugned order should be set aside.
In continuation to the above, they further submit that even the highest court of India – Hon’ble Supreme Court has held in the case of COMMISSIONER OF CENTRAL EXCISE, TRICHY VERSUS GRASIM INDUSTRIES LTD. [2005 (183) E.L.T. 123 (S.C.)] that where the act of assessee is based on the interpretation taken by the Tribunal, penalty cannot be imposed as the act is based on bonafide belief. The verdicts of Apex Court are produced as follows:-
“Penalty - Bona fide belief caused by Tribunal’s decision - Tribunal in a number of cases giving an interpretation as understood by assessee - Penalty not imposable - Rule 173Q of erstwhile Central Excise Rules, 1944 - Rule 25 of Central Excise Rules, 2002. [para 20]”
In the present case, their act of non-payment of service tax on various incentives is backed by number of decisions given by various Tribunals. The analysis of above decision makes it clear that since they have acted under bonafide, no penalty can be imposed on them. Therefore, the benefit of above decision of Hon’ble Supreme Court should be extended and the whole proceedings should be dropped.

Aligning with above, it is submitted that the appellant had submitted the above referred decisions in the reply to show cause notice submitted by them. But, while passing the impugned order, these decisions have simply been brushed aside. None of them were discussed and distinguished while passing the impugned order. This has made the impugned order as non reasoned and non speaking order which is not sustainable in view of Supreme Court decisions given in the case of STATE OF HIMACHAL PRADESH VS SARDARA SINGH [2008-TIOL-160-SC-NDPS] as already discussed in the forgoing paras. In this regard, the impugned order has relied on the decisions given in the case of GOODYEAR INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NEW DELHI [2002 (149) E.L.T. 618 (TRI. - DEL.)]. In this regard, it is worthwhile to mention here that this decision is not applicable in the instant case as it is pronounced by Tribunal which is not binding precedents in view of hon'ble Supreme Court decisions cited by the appellant in their reply to show cause notice. Therefore, the impugned order is not tenable in not discussing the Supreme Court decisions cited by them and in turn citing the judgment of lower appellate authority. Such an approach is not justified and the impugned order deserves to be quashed.
Reasoning adopted by the adjudicating authority: -It was held that since the premises of the appellant comprises of temple along with marriage hall, therefore the renting of premises by the appellant is squarely covered by the exemption contained in entry no.05 of the Mega Exemption notification. Therefore the appellant is not liable to pay service tax. Further as per section 65B(44) of Finance Act,1944, “services” means any activity carried out by a person for another for consideration, and includes a declared services. The premises let out does not involve any consideration, which is clear from the donation receipt submitted by the appellant which is voluntary in nature, no service tax payable on the renting of premises by the appellant.
Further since the service tax demand is not tenable against M/s Sindhi Welfare & Medical Society, Jodhpur, the penalty imposed on the President Shri Kanhaiyalal Tewani is not sustainable.

Conclusion:- The gist of the case is that the Mega exemption notification no.25/2012-ST provides that the renting of precincts of religious place meant for general public. Thus based upon this notification we can conclude that since the premises of the appellant comprises of temple along with marriage hall therefore the appellant is not liable to pay service tax as it is covered under the mega exemption notification. Moreover there is no service tax liability on M/s Sindhi welfare & medical society and thus President Shri kanhaiyalal Tewani is also not liable for any penalty.

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PJ/Case Study/2018-19/134
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