MANDAP KEEPERS

 

Date of Introduction:01.07.1997 vide Notification No.19/97-ST    dt.26.06.1997.

Definition:

“Mandap Keeper” means a person who allows temporary occupation of a Mandap for consideration for organizing, any official, social or business function.

(Section 65(39) of Finance Act, 1994 as amended)

“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 organizing any official, social or business function.

(Section 65(38) of Finance Act, 1994 as amended)

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 includes within its scope places like kalyana mandaps or marriage halls, banquet halls, conference halls, etc. Hotels and restaurants providing any such facility within their premises for organizing any social, official or business function are also included in the coverage of Service Tax.  Therefore, the levy of Service Tax would apply in all these cases. (Ministry’s F.No.B­43/3/97-TRU dt.26.06.1997)

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.

(Ministry’s F.No.B-43/3/97-TRU dt.26.06.1997)

Taxable events and scope of Service:

Taxable Service means service provided 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 caterer.

(Section 65(72)(m) of Finance Act, 1994 as amended)

Any sports stadium or Gymkhana let out their premises for a consideration for holding official, social or business functions would fall within the purview of Mandap.

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 official/business function.

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

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 social/business function.

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

Mandap let out for stay of “Barratis” for a consideration would attract Service Tax, as “Barratis” is a part of marriage, which is a social function.

Letting out of school/college building/open land for marriage function, which is also a social function, would attract Service Tax.

Open land /ground is to be treated as an “immovable property” as per the definition given in section 3 of Transfer of Property Act, 1882 and hence the above premises let out for consideration will fall under the category “Mandap” for the levy of Service Tax.

The pavilion owners, either private or a Govt. undertaking are liable to pay Service Tax under the category “Mandap keeper” for hiring out space/stall, e.g. a trade fair, to individuals who organize their business function as per their own requirement.

Value of Taxable Service:

The value of the taxable service shall be the gross amount charged by the mandap keeper for such service rendered by him. (Section 67 of Finance Act, 1994 as amended)

The value of taxable service is a 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 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. 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. (Ministry’s F.No.B-43/3/97­TRU dt.26.06.1997)

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

Exemption and Exclusion:

1. Where a mandap keeper also provides catering services that is supply of food, in addition to the lettin g out of the mandap and charges the customer for supply of food, an abatement of 40% of the total amount charged has been 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 (vide Notification No.21/97-ST dt.26.06.1997).  This abatement would generally apply in the case of hotels, clubs, also acting as mandap keepers.

2. The activity of shooting of Film / T.V. serial can not be considered to a official, social or business functions hence the renting out of Studio premises for such activities would not be covered under the category of Services provided by Mandap Keeper.

3. Sales Tax, Expenditure Tax are statutory levies and therefore they cannot be included in the value of the taxable services.

4. The charges of vessel, furniture, decoration etc provided by the third party other than the Mandap Keepers are not includible in the taxable value if the Mandap Keepers is not associated with such supply in any way since the said facility is not provided by the Mandap Keeper.

5. Giving the theatre on rent showing the premiere shows of movies which is a part of entire process of making and releasing the feature films in cinema theatres would not attract Service Tax as screening of feature film in cinema theatre is not an official, social or business function.

6. Some times booking is made for Mandaps are cancelled. In such cases the question of levy of Service Tax does not arrive as no service has been rendered. Service Tax need not be paid at the time of booking of the Mandap but only when the service is actually rendered and bill raised by the Mandap Keeper to his client. Security amount if any paid while booking the Mandap need not be included in the assessable value, if it is refunded.

7. Art Galleries are exempted. vide Board’s Circular No. 42/05/2002-ST issued vide F.No. 176/3/2001-CX 4 dated 29/4/2002.

Case Law:

Constitutional validity of levy of Service Tax on Mandap keepers was challenged by Tamil Nadu Kalyan Mandap Keepers Association in Writ Petition no.1617/98 in the Madras High Court which has been dismissed by the said Hon’ble Court vide order dated 30^th April 2001.

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