M/S Lalloo Ji & Sons vs Officer Incharge, Magh Mela , ...
2015 Latest Caselaw 1339 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR                                                                                          
 
                                                             COURT NO.37
 

 
CIVIL MISC. WRIT PETITION(Tax) No. 768 of 2005
 
   M/s Lalloo Ji and Sons
 
Vs.
 
 Officer Incharge Magh Mela,Allahabad and others 
 
 ***
 
Hon'ble Tarun Agarwala, J.

Hon'ble Surya Prakash Kesarwani, J.

(Per: Tarun Agarwala,J.)

The petitioner is a partnership firm and contends that it is registered under Section 69 of the Finance Act, 1994 by which Service Tax became payable on certain taxable services. Respondent No.1, namely, the Officer Incharge of the Magh Mela at Allahabad issued a tender for the year 2004-05 inviting tenders from various Pandals and Shamiyana contractors for supply of various items as specified in the tender notice, such as tents, etc. The tender submitted by the petitioner was accepted by the Mela Officer Incharge. An agreement for supply of tents on hire purchase basis was executed. Clause 11 of the agreement specified that Trade Tax and Service Tax would be payable by the Officer Incharge, Magh Mela. The petitioner contends that based on the agreement, the petitioner supplied the necessary tents and thereafter raised three bills amounting to Rs.97,39,351.50, which included Trade Tax @ 5% and Service Tax @ Rs.10.2%. The Mela Officer made the payment of the bills minus Service Tax which amounted to Rs.8,62,338.34. The petitioner thereafter made a representation requesting the Magh Mela Officer to pay the Service Tax so that the petitioner could in turn deposit the same to the Central Excise Department, respondent No.2. The Mela Officer intimated the petitioner that they have sought opinion from the District Government Counsel, who has opined that the Mela Officer was not liable to pay the Service Tax inasmuch as Pandal or Shamiyana services provided by the petitioner was for pure religious ceremonies or congregation, which was held in the Allahabad Magh Mela area. The petitioner, being aggrieved by the non-payment of the Service Tax, has filed the present writ petition for the quashing the letter dated 20.3.2005, by which the Mela Officer has declined to make the payment of Service Tax and for a writ of mandamus commanding the Mela Officer to make the payment of Service Tax along with interest and penalty.

The Mela Officer has filed a counter affidavit contending that in view of the circular dated 17.9.2004 Service Tax is not payable to the Pandal or Shamiyana service providers for religious purposes and, consequently, Service Tax was not payable on the bills raised by the petitioner.

The Central Excise Department has also filed a counter affidavit contending that the petitioner is a "Mandap keeper" and, accordingly, Service Tax is liable to be paid by him. The petitioner has filed a supplementary affidavit indicating that it has received a notice of demand dated 7.4.2006 issued by respondent No.2, i.e., the Central Excise Department, by which the petitioner has been directed to pay the Service Tax, interest and penalty on the bills raised by it to the Mela Officer.

In the light of these facts, we have heard Sri Suyash Agarwal, the learned counsel for the petitioner, Sri Prateek Shukla, holding brief of Sri Vinod Kant Srivastava, the learned counsel for the Central Excise Department and Sri U.K. Pandey, the learned standing counsel for the State.

By Finance (No.2) Act of 1994, Service Tax became payable w.e.f. 10.9.2004 on the services provided by Pandal or Shamiyana contractors. Section 65(77a) of the Finance Act defines ''Pandal or Shamiyana' as under:

"Section 65(77a) defines Pandal or Shamiyana- Pandal or Shamiyana means - the place specially prepared for arranged for organizing an official, social or business function."

Section 65(77b) of the Finance Act defines Pandal and Shamiyana contractor as under:-

"Pandal or Shamiyana contractor means - a person engaged in providing any service, either directly or indirectly in connection with the preparation, arrangement, erection or decoration of a Pandal or Shamiyana and includes the supply of furniture, fixtures, lights and light fitting, floor covering and other articles for the use there in."

Section 65(105 zzw) of the Finance Act defines taxable services as under:-

"Taxable service" means any service provided to a client by a Pandal or Shamiyana contractor in relation to Pandal or Shamiyana in any manner and also includes the service, if any, rendered as caterer."

In view of the aforesaid provisions ''Pandal or Shamiyana contractors' were liable to pay Service Tax on the services provided by them directly or indirectly in connection with the preparation, arrangement, erection or declaration of a Pandal or Shamiyana which included supply of furniture, fixtures etc.

However a clarification dated 17.9.2004 was issued by the Department. Paragraph 11.4 of the Circular dated 17.9.2004 is extracted herein:

"It is clarified that pandal/shamiana services provided for pure religious ceremonies or congregation for example, for worship of Gods/Goddesses, are not liable to service tax. It is also clarified that in case a cafe, hotels, restaurants etc. delivers food to home and no charge, other than that for the cost of the foods, is charged (i.e. free home delivery) no service tax is leviable."

The aforesaid clarification clearly indicates that the Pandal or Shamiyana contractor who provided services for pure religious ceremonies or congregation would not be liable to pay Service Tax.

The stand of the Central Excise Department is that the petitioner is a Mandap Keeper and in view of Section 65(66) read with Section 65(67) of the Finance Act, the petitioner being a Mandap keeper is liable to pay Service Tax. For facility, Section 65(66) and 65(67) of the Finance Act, 1994 are extracted hereunder:

"(66) "mandap" means any immovable property as defined in section 3 of the Transfer 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 or business function.

[Explanation.- For the purposes of this clause, social function includes marriage;]

(67) "mandap keeper" means a person who allows temporary occupation of a mandap for a consideration for organising any official, social or business function.

[Explanation.- For the purposes of this clause, "social function" includes marriage;]"

From a perusal of the aforesaid, it is clear, that a Mandap Keeper is a person who allows temporary occupation of a Mandap for organizing any official, financial, social or business function. The Mandap is in relationship to any immovable property as defined under Section 3 of the Transfer of Property Act, 1882 and includes any furniture and fixtures etc.

We are of the opinion that the definition of Mandap Keeper and Mandap makes it apparently clear that the petitioner does not come under this definition clause. The petitioner is a Pandal or Shamiyana contractor providing services in connection with the preparation, arrangement, erection or decoration of a Pandal or Shamiyana. Further, we find, that Mandap keeper is for organization of any social, official or business function. However, the Department has issued a clarification dated 17.9.2004 which provides that Pandal or Shamiyana keepers will not be liable for Service Tax, if they provide services for purely religious ceremony and congregation.

In this regard we may refer the provisions of United Provinces Mela Act, 1938, which was enacted for the purpose of conducting the Mela including the Kumbha Mela and Ardh Kumbh Mela at Allahabad.

Section 4 defines Mela as under:-

"4. Definition- (i) "Melas" means a religious fair or other religious gathering of the public other than-

(a) a mela or gathering held under the authority of a local board; or

(b) a Muslim religious gathering held in connection with a dargah or shrine."

Section 9 gave power to the State Government to frame Rules and based on the said Section the United Provinces Mela Rules was enacted. Mela was defined under Section 2(ii) as under;

"(ii) "Mela means the Magh Mela and other religious gathering and pilgrims visitations in the Mela area at Allahabad throughout the year."

From the perusal of the definition of ''Mela' it is clear that services provided by a Shamiyana and Pandal contractor for a religious fair or congregation in the Mela area at Allahabad would be covered under the Circular dated 17.9.2004. In the instant case the tender invited by the Mela Officer was for the purpose of erection of temporary tents etc. in the Mela area during the Magh Mela season for the year 2004-05. Since the supply of the tents by the petitioner was for a religious congregation, which was held in the Mela area at Allahabad, the respondent No.1 was not liable to pay the Service Tax to the petitioner.

Accordingly the relief claimed by the petitioner cannot be granted.

The writ petition is dismissed with the observation that it is not open to the Central Excise Department to demand Service Tax on the services provided by the petitioner in the Mela area for the year 2004-05.

Dated:20.7.2015.

AKJ.

    (Surya Prakash Kesarwani, J.)      (Tarun Agarwala, J.)