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2001 DIGILAW 689 (KER)

Vicar, Holy Family Church v. Union of India

2001-11-27

B.N.SRIKRISHNA, M.RAMACHANDRAN

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Judgment :- B.N. Srikrishna, C.J. These three petitions raise the same questions of law, and, therefore, they can be conveniently disposed of by a common judgment. 2. The core issue in these three petitions is the challenge to the notice issued by the Revenue calling upon the petitioners to comply with the provisions as to registration under the Service Tax Rules, 1994 and to pay the service tax contemplated thereunder for rendering the taxable service of 'mandap keeper' as defined in S.65(20) of the Finance Act, 1994. 3. In O.P. No. 6815 of 1998, petitioners are three churches in the Kottayam District registered as Charitable Trusts under the Income Tax Act and also registered under the Charitable and Religious Trust Act. These churches have attached parish halls in which it is claimed that several religious and spiritual functions like Catechism classes, Palliyogam, Bible Classes, Retreat, Prayer meetings, Religious seminars, etc. are carried on. It is the case of the petitioners that no social, official or business functions are conducted in the parish halls and that the parish halls are not let out to any one for consideration. It is stated that these parish halls are established and administered by Roman Catholics, a Christian religious denomination of the minority community, with the contributions of the parishoners and the voluntary donations made by the parishoners. Petitioners, therefore, contend that the parish hall is neither a 'mandap' as defined in S.65(19) of the Finance Act, 1994 as amended by the subsequent Finance Act, 1997 and Finance Act, 2001, nor are the petitioners carrying out any taxable service within the meaning of S.65(20) of the Finance Act, 1994 as amended by the subsequent Finance Acts. 4. In O. P. No. 10547 of 2000, the averments are almost the same. Here also, the petitioner is a church established in Changanacherry in Kottayam District registered as a Charitable Trust under S.12A of the Income Tax Act and also registered under the Charitable and Religious Trust Act. Here also the church has a parish hall, which the petitioner claims is not let out for consideration to any one, but used for religious activities of the church. Based on these alleged facts, it is contended that petitioner church is not a'mandap', nor does it render any taxable service within the definition of 'mandap keeper' as defined in the Finance Act. 5. Based on these alleged facts, it is contended that petitioner church is not a'mandap', nor does it render any taxable service within the definition of 'mandap keeper' as defined in the Finance Act. 5. O.P. No. 12320 of 2001 is by another church known as "Sacred Heart Church", Chenkal, in Kottayam District under the Diocese of Kanjirappally. Petitioner church also claims that its parish hall is used for Sunday Schools by the parishoners and does not amount to 'mandap' within the meaning of the word under the Finance Act, nor does it carry out taxable service within the definition of the term'mandap keeper' under the Finance Act. 6. In each of these cases, the Revenue has filed a detailed counter affidavit in which the averments made in the petition that the parish hall is used only for religious activities and not let out for consideration to any one for social, official or business purpose, is controverted. It is asserted in the counter affidavit that social functions are also held in these parish halls apart from the religious activities of the church. The details are indicated as to the type of social functions held. It is also contended that consideration is paid by the persons who use the parish hall, though often styled as "donation". On this basis, the Revenue contends that the parish halls maintained by the petitioners amount to 'mandap' as defined in the Finance Act, and that the petitioners are rendering taxable service of 'mandap keeper' within the meaning of the said term defined in the Finance Act. 7. The Finance Act, 1994, amended by subsequent Finance Acts, including the Finance Act, 2001, is intended to levy a tax called 'service tax' on the 'taxable service' rendered by certain persons. The taxable service with which the petitioners are concerned is defined in S.65(72)(m) as a service to a client by a mandap keeper in relation to the use of the mandap, in any manner, including the facilities provided to the client in relation to such use and also the service, if any, rendered as caterer. The expressions 'mandap' and 'mandap keeper' are defined respectively in Ss.65(38) and 65(39) of the Finance Act, 2001 in the following manner. The expressions 'mandap' and 'mandap keeper' are defined respectively in Ss.65(38) and 65(39) of the Finance Act, 2001 in the following manner. "mandap' means' any immovable property as defined in S.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 consideration for organising any official, social or business functions". "mandap keeper 'means' a person who allows temporary occupation of a mandap for consideration for organising any official, social or business functions". These expressions are similarly defined in the previous Finance Acts including the Finance Act, 1994. 8. The definition of 'mandap' has several elements:- (a) that it should be immovable property as defined in the Transfer of Property Act, 1882, inclusive of furniture, fixtures, etc. ; (b) that it should be let out for consideration; and (c) for organising any official, social or business functions. As to whether the parish halls and their use falls within the requirement of S.65(38) defining the expression 'mandap' necessarily depends on the facts proved in a given case. The statute has prescribed an elaborate machinery of assessment wherein the petitioners would have opportunity to lead evidence to satisfy the assessing authorities that the parish halls maintained by them, and given out for use of its parishoners, do not amount to 'mandap' because they do not fulfil the requirements of the definition and that the petitioners are not 'mandap keepers' as defined in the Finance Act. It is not possible for us, in a Writ Petition, to resolve satisfactorily the controversy on facts with regard to each facet of the definition contended before us. For example, whether consideration is charged by the petitioners would require examination of the documents maintained by the petitioners. Even assuming that the case of the petitioners is that the parishoners make voluntary donations, it is open to the assessing authority to look at the facts and circumstances, and arrive at its conclusion. In a given case, the assessing authority may hold that the contribution of Parishoners, though styled as donation, amounts to 'consideration' within the definition of S.65 (38) of the Finance Act, 2001. 9. These are matters on which it is not possible for this Court to express any opinion, on the basis of the scanty material on record. In a given case, the assessing authority may hold that the contribution of Parishoners, though styled as donation, amounts to 'consideration' within the definition of S.65 (38) of the Finance Act, 2001. 9. These are matters on which it is not possible for this Court to express any opinion, on the basis of the scanty material on record. We are, therefore, of the view that these contentions can be urged before the assessing authority constituted under the Statute. It would then be possible for both the assessee and the Revenue to lead necessary evidence before the assessing authority who would be better equipped with the facts, in the first place, and then apply the law. Either party would have the appellate remedy available under the statute in case of dissatisfaction. We are thus of the view that writ jurisdiction is most unsuitable for deciding the issues which bristle with factual disputes. 10. Another subsidiary contention raised by the learned counsel for the petitioner, is that the clarification issued by the C. D. E. and C Circular F. No. B/43/97-TRU, dated 26th June, 1997, particularly para 2. 7, has virtually foreclosed all contentions of the petitioner before the assessing authority. We had an occasion to discuss the import of his clarification in our judgment, dated 21st November, 2001 in O. P. No. 16789 of 1997, where we have held that, notwithstanding this clarification, the question of law can be urged before the Assessing Authority. 11. In the result, we find no necessity to interfere at this stage. The Original Petitions are dismissed. It shall be open to the petitioners to raise all questions of fact and law before the Assessing Authority under the Act. No order as to costs.