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Service tax on banquet hall- mandap keeper (Service Tax)

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This query is : Resolved



( Author )
08 September 2011

WHAT ARE RELAVANT PROVISIONS RELATING TO SERVICE TAX ON BANQUETS,(PLS. MENTION RULE NO. ETC.) AS I KNOW ON TOTAL INVOICE VALUE, 60% VALVE SHALL BE FOR SERVICE TAX AND 40% SHALL BE FOR VAT.
IS IT CORRECT. PLEASE CONFIRM.


C A S.S.Agarwal, M.Com.,LL.B,

( Expert )
08 September 2011

Indian Service Tax

Mandeep Keeper

Effective Date: 01/07/1997.

Authority: Notification No. 19/97-ST, dt 26/06/1997 (for full text of Notification see under ‘Air Travel Agent’)

Rate of Service Tax: 8% from 14/5/2003 (5% upto 13/5/2003). 10% from 10/9/2004-Cess 2% of 10% = 0.2.Total ST = 10.2%.

Definition: "Mandap” means any immovable property as defined in section 3 of the Transfer of property Act, 1882(4 of 1882) and includes any furniture, fixtures, light fittings and floor coverings therein let out for a consideration for organising any official, social r business function; [Section 65(66)].

"Mandeep Keeper " means a person who allows temporary occupation of a mandeep for a consideration for organising any official, social or business function, [Section 65(67)]

Taxable Service: Mandeep service by a Mandeep keeper in relation to use of Mandeep and also the service, if any rendered by him as a catere.

Value of taxable service: Gross amount charged by Mandeep keeper from client for the use of mandeep including the facilities provided to the client in relation to such use and also the charges for catering, if any.

Exemptions

Exemption 1- See Notification Nos. 21/97-ST, dt. 26/06/1997 and 12/2001-ST, dt. 20/12/2001

Exemption 2- (Para 2.7 of Cir.No. 59/8/2003-ST, dt.20/6/2003):

2.7 Mandeep Keeper Service:

Religious places like parish hall temples etc provide services as mandeep keeper for hosting of social and religious functions. Though such services are liable to service tax under the mandeep keeper services, vide notification No.14/2003-Service Tax,20thJune, 2003 services provided by the religious centres as mandeep keeper in their precincts have been exempted from service tax.

Religious functions like Marriages, Brahmopadesha – 2003 (157) elt 182 (Tri-Bang).

Religious places like parish hall temples etc., which provide services as mandeep keeper for social and religious functions.

Para 2.7 of Cir.No.59/8/2003 ST dt. 20/6/2003 and Notfn. No. 14/2003-ST dt.20/6/2003

Abatement of 40% if Mandeep keeper also provides catering services- Notfn.No. 21/97-ST, dt. 26/6/1997.

Art. Galleries – Cir. No.42/5/2002-ST, dt.29/4/2003

Person liable to pay: Mandeep Keeper

Head of Account







SI. Code

SCCD

Minor-head

004400110

Mandeep Keeper Services





Sub-head

00440011001

Tax Collection

00440035

118

Sub-head

00440011002

Other Receipts

00440036

111

Sub-head

00440011003

Deduct Refunds

00440037

110

Questions & Answers

Q. 1. What is a Mandeep and who is a "Mandeep Keeper”?

Ans. "Mandeep” is any immovable property as defined in Section 3 of the Transfer of Property Act, 1882 and includes any furniture, fixtures, light fittings and floor coverings therein, let out for consideration for organising any official, social or business function. "Mandeep Keeper” is "a person who allows temporary occupation of a mandeep for consideration for organising any official social or business function”.

The meaning of ‘mandap’ is very wide in its scope and includes all immovable properties let out for organising social, official or business functions. It includes places like kalyana mandaps or marriage halls, banquet halls, conference halls, etc. Hotels and restaurants providing any such facility within their premises for organising any social, official or business function shall also be obviously included in the coverage of Service Tax. Therefore, the levy of Service Tax is attracted in all these cases.

The definition also includes mandaps, which are located or situated within the premises of any public place of worship such as temple, church, etc. and let out on charges.

Q. 2. What is the taxable service in case of a Mandeep Keeper?

Ans. In case of a Mandeep Keeper, the taxable service are the services rendered to a client by mandap keeper in relation to the use of mandap in any manner including the facilities provided to the client in relation to such use and also services, if any rendered as a catere.

Q. 3. What is the value of taxable service in case of a Mandap Keeper?

Ans. The value of the taxable service means the gross amount charged by the mandap keeper from the client for use of the mandap keeper including the facilities provided to the client in relation to such use and also the charges for catering if any.

The Service Tax would be leviable not only on the hire charges for the mandap but also charges for electricity, whether on actual basis or otherwise, charged to the customer. The tax is to be collected on the whole amount even if separate bills are issued one for the rental and the other for electricity charges. The mandap keeper may also bill the client for other services rendered by him such as charges for providing furniture, fixtures, lighting fittings, vessels, crockery, cutlery, etc. All these charges are includible in the value of taxable service for the levy of Service Tax.

Q. 4. What is the value of taxable service where Mandap keeper is also providing Catering service?

Ans. Where a mandap keeper also provides catering services, that is supply of food, in addition to the letting out of the mandap and charges the customer for supply of food, an abatement of 40% of the total amount charged is provided while computing the value of the taxable service. This. abated value would be the value of taxable service in such cases. In other words, Service Tax will be leviable on 60% of the total amount billed in such cases. This abatement would generally apply in the case of hotels, clubs, also acting as mandap keepers.

Q. 5. Would sports stadia, Gymkhana etc. fall within the purview of Mandap?

Ans. Yes, they would, if they let out their premises for a consideration for holding official, social or business functions.

Q. 6. Is Service Tax to be paid on the elements of sales tax and expenditure tax etc. ncluded in the gross bill raised to the client by Mandap Keepers?

Ans. No. Since Sales Tax, Expenditure Tax are statutory levies, they cannot be included in the value of the taxable services. Any calculation of the Service Tax has to be on the value of service excluding the statutory taxes.

Q. 7. Is activity of temporary renting out of studio premises for the purpose of shooting of Film/T.V. serials liable for payment of Service Tax under the category of service provided by Mandap Keeper?

Ans. The activity of temporary renting out of studio premises for the purpose of shooting of filmIT. V serials would not be covered under the category of service provided by Mandap Keeper but would be covered under the category of Video Tape Production Service

Q. 8. Would renting of Banquet Hall for the purpose of conducting the Seminars and conferences fall within the definition of taxable service in case of" Mandap Keepers' ?

Ans. Yes. The renting of Banquet halls for conducting the Seminars/conferences would fall within the ambit of the definition of the taxable service provided by a Mandap Keeper as such seminars/conferences are considered as officia1/business functions.

Q. 9. Is Service Tax payable by the Clubs ,who are making their premises available to their members only, for organising social function such as marriage, birth day parties etc.?

Ans. Yes. The services provided by Clubs, by way of making the premises available to their members for organising social functions on payment of feel charges, would fall under the category of service provided by Mandap Keeper and would be liable to payment of Service Tax.

Q. 10. Do hotels and restaurants fall within the meaning of the word "Mandap" for the purposes of levy of Service Tax on services rendered by Mandap Keeper and is Service Tax attracted when the hotel/ restaurants let out their halls, rooms, etc. for social, official or business functions?

Ans. Yes. Hotels and restaurants would fall into the definition of Mandap if they let out their banquet halls, rooms, gardens etc. for holding / organising any marriages, parties, conferences, show and other such socia1/business functions.

Q. 11. Is Service Tax attracted in cases where premises and! or connected facilities are let out on rent to clubs and cultural organisations for the purPoses of holdings programmes relating to dance, drama & Music?

Ans. Yes. Renting out hall etc. for purpose of holding a dance, drama & Music programmes or competition is chargeable to Service Tax, as the same are social functions.

Q. 12. Apart from providing temporary occupation of "Mandap" for any official, social or business function, if a "Mandap Keeper" provides it for stay of Baraatis, is he liable to levy of Service Tax on such service?

Ans. Stay of "Baraatis"is part of the marriage function, which is a social function, and hence would attract Service Tax if the mandap is let out for a consideration.

Q. 13. Whether the charges of vessels, furniture, decoration etc, provided by the third party other than the Mandap Keepers are includible in the taxable value?

Ans. The charges of vessels, furniture, decoration etc, provided by the third party other than the mandap keepers are not includible in the taxable value if the mandap keeper is not associated with such supply in any way since the said facility is not provided by the mandap keeper.

(Authority: Definition of taxable service at clause (m) of Section6S(48) of chapter V of the Finance Act 1994)

Q. 14. In summer oclidays or in other holidays the private Schools / Municipal schools and colleges are letting their schools / college buildings for

Marriage functions. Do they come under the Mandap Keeper / Are they liable to pay Service Tax?

Ans. Marriage function is also a social function and hence the letting out of school /college/buildings/open land would attract Service Tax under the category of Mandap Keeper.

Q. 15. Whether donations accepted /received as consideration for letting out the Mandap is liable for Service Tax?

Ans. Donation is also a form of consideration for letting out the "Mandap” and, hence would attract Service Tax.

Q. 16. Whether Cinema Theatres showing Premier shows of movies will be liable for payment of Service Tax under Mandap Keeper Category if the theatre is given on rent?

Ans. Screening of feature films in cinema theatres is not an official, social or business function and, therefore, no service tax would be leviable under the category of "Mandap Keeper” for giving the theatre on rent for showing premier shows of movies which is a part of the entire process of making and relating the feature films in cinema theatres.

Q. 17. Whether an open land or ground let out for consideration for organising any social or official or business function can be considered as a Mandap and appropriate tax collected?

Ans. Even the open land/ground is to be treated as an ‘immovable property’ as per the definition given in Sec.3 of Transfer of property Act, 1882 and hence the above premises let out for consideration also falls under the category ‘Mandap’ for the purpose of key of levy of Service Tax.

Q. 18. Whether the pavillion owned by a Govt. Undertaking would be covered under the definition of mandap or not? Whether such organisation is covered under the category of Mandap Keeper by virtue of Notification No. 19/97-ST dt. 01/07/97?

Ans. The pavillion owners, either private or a Govt. under-taking, are liable to pay service tax under the category "mandap keeper” for hiring out space/stall, e.g a trade fair, to individuals who organise their business function as per their own requirement.

Q. 19. Whether the services provided by a Mandap Keeper from a religious place are liable for Service Tax?

Ans. The services provided by a Mandap Keeper from the precincts of a religious place are exempted from payment of Service Tax.

[Source CBEC Website]

Q. 8.1 Whether the services provided by a Mandap Keeper from a religious place are liable for Service Tax?

Ans. The services provided by a Mandap Keeper from the precincts of a religious place are exempted from payment of Service Tax.

[Source: Directorate of publicity and public Relations, Customs & Central Excise, New Delhi, October, 2003].

Main text of Department Circular/TN

[TN No. 6/97-Service Tax, date : 01/07/1997 of Mumbai]

2.1 As per clause (19) of Section 65 of the Finance Act, 1994, "Mandap” means any immovable property as defined in section 3 of the Transfer of Property Act, 1882 and includes any furniture fixtures, light fittings and floor coverings therein, let out for consideration for organising any official, social or business function. " Mandap Keepers” has been defined as " a person who allows temporary occupation of a mandap for consideratrion for organising any official, social or business function”., It may kindly be noted that the definition of mandap is very wide in its coverage and covers all immovable properties let out for organising social, official or business function. It includes within its scope places like kalyana mandaps or marriage halls, banquet halls, etc.,Hotels and resturants providing any such facility within their premises for organising any social, officials or business function shall also be obviously included in the coverage of service tax. Therefore, the levy of the service tax will apply in all these cases.

2.2 The taxable service has been defined as services rendered to a client by mandap keeper in relation to the use of mandap in any manner including the facilities provided to the client in relaiton to such use and also services, if any rendered as a caterer and the value of the taxable service menas the gross amount charged by the mandap including the facilities provided to the client in relation to such use and also the charges for catering, if any.

2.3 A number of points have been raised by the associations representing mandap keepers with respect to the levy of service tax on their activities. These are discussed in the ensring paragraphs.

2.4 The person responsible for collecting the service tax will be "mandap keeper”. The service tax would fall not only on the hire charges for the mandap but also charges for electricity, whether on actual basis or otherwise, charged to the customer therefore , it may be ensured that the tax is collected on the whole amount even if separate bills are issued one for the rental and the other for electricity charges. The mandap keeper may also bill the client for other services rendered by him such as charges for providing furniture, fixtures, lighting fittings, vessels, crockery,cultery, etc. all these charges are includible in the value of taxable service for the levy of service tax.

2.5 Where a mandap keeper also provides catering services, that in supply of food, in addition to the letting out of the mandap and charges the customer for supply of food, and abatement of 40% of the total amount charged has been provided while computing the value of the taxable service. This will be deemed to. be the value of taxable service in such cases. In other words, service tax will be leviable on 60% of the total amount billed in such cases (vide notification No. 21/97-Service Tax, dated 26th June, 97). This mainly happens in the case of hotels, clubs etc.

2.6 Sometimes it may happen that the booking made for the mandap is subsequently cancelled. In such cases, the question of levying service tax does not arise as no service has been rendered. It may kindly be noted that the tax has to be paid not at the time of booking of the mandap but when the service is actually rendered and the bill raised by the mandap keeper to the client.

2.7 It may also be noted that in view of the definition of mandap as discussed in para 2.1 above, even if the mandap is located or situated within the premises of any public place of worship such as temple, church, etc. and charges are collected for letting out of the mandap, the tax would be applicable.


manoj

( Author )
13 September 2011

Dear mr. Agarwal,
my doubt is regarding value for applicability of Vat.
as the wording of notification stats law presume 60% value for service and gives abatment of 40%. Shall we presume remaing 40% for Vat. (mandap keeper providing catering service)
Now my doubt is that whether only 40% value shall be taken for leviability of service tax.
Please explain practical approach in the industry.
Please contact --9958768678
thanks.


CA Jeen paul

( Expert )
19 October 2011

Mr.manoj
under kerala vat there are no specific exemption is given for the hoteliers acting as "mandap keepers" who covered under service tax act and enjoying the benefits of abatement as per notification.
the hotelier is required to pay applicable VAT on whole of the food sale.


mr.manoj i would like to share an extra information from the industy of banquet hall acting as mandap keepers.

billing structure:

issue seperate bill
food = VAT BILL
HALL = SERVICE TAX BILL FOR HALL RENT

PAY SERVICE TAX ON HALL RENT AND TAKE EXEMPTION FOR FOOD BILL AS PER NOTIFICIATION NO.12/2003
BUT THIS APPROCH IS DISPUTED AND RECENTLY CESTAT DELHI: IN THE CASE OF SAYAJI HOTELS
DECIDED AGAINST THIS APPROACH AND m/S SAYAJI HOTELS APPROCHED SUPREME COURT AND THE CASE IS ON IN SC.


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