The assessee had let out the hotel rooms which were integrally used in connection with the functions organized by the organizers in the adjacent gardens and the payment for the entire premises was made by the organizers under a composite contract.
The Adjudicating authority held that the service of renting of room was definitely part and parcel of the service provided in relation to holding of the functions of marriage/meetings/conference and as such was covered under the definition of ‘mandap keeper service’. The amount charged in the name of renting of rooms to the participants of the marriage parties/conference/meeting was chargeable to service tax in terms of section 67 being a consideration for the taxable services provided includible in the value for purpose of charging of service tax and it was immaterial whether it was billed together or separately. And The Commissioner (Appeals) held that service provided by the assessee in relation to renting of rooms in connection with marriage ceremony was covered under the definition of ‘mandap keeper service’ and the gross amount charged for the service was the value of service for levy of service tax.
The High Court of Rajasthan vide D.B. CENTRAL EXCISE APPEAL NO. 20 OF 2012 in the case of Commissioner of Central Excise, Jaipur vs. Rambagh Palace Hotels (P.) Ltd. dated November 8, 2017 stated that renting of halls of hotels rooms cannot be held to be covered by the definition of ‘Mandap Keeper’ in as much as the hotel has an identity, personality and function quite distinguishable from that of a mandap. In any case, we find that the activity entirely different from the mandap keeper activity. The definition of Mandap Keeper nowhere covers the temporary occupation of hotel rooms for the purpose of boarding, temporary residence. It is not disputed that no function is held in the hotel room which is used for the purpose of staying in the same. As such, we are of the view that the order of the lower authorities holding inclusion of the hotel rooms rent into the value of Mandap Keeper Service is not sustainable. The same is accordingly set aside and the appeal is allowed with consequential relief to the appellant.
Citation: [2018] 97 taxmann.com 532 (Rajasthan)