FAQ for Mandap Services

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  • January 6, 2014 1:10 pm
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Q.1  What is a Mandap and who is a “Mandap Keeper”?
Ans. “Mandap” 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. “Mandap keeper” is “a person who allows temporary occupation of a mandap 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 Mandap Keeper?
Ans.

In case of a Mandap 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 caterer.
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 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. included 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. No. The activity of shooting of film/T.V. serial cannot be considered to a official, social or business function. Hence, the renting out of studio premises for such activities would not be covered under the category of services provided by a Mandap Keeper.
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 official/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 fee/ 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 social/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 Section 65 (48) of chapter V of the Finance Act 1994)

Q.14 In summer holidays 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 Keepers services ? 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 releasing 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 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.

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