AUTHORITY FOR ADVANCE RULINGS

(CENTRAL EXCISE, CUSTOMS & SERVICE TAX)

NEW DELHI

PRESENT

Ruling No. AAR/01(ST)/2005
in
Application No.AAR/111(ST)/2004

Applicant                                                                      Shri Kartar Singh Kochar

                                                                                    S/o late Shri Sucha Singh

                                                                                    C-30, Usha Niketan

                                                                                    New Delhi-110016

Commissioner concerned                                               Commissioner, Service Tax,

                                                                                    Delhi

Present :  for the applicant 
 for the Commissioner                                                   Shri P.S. Narasimha, Advocate

                                                                                  Shri Chandrashekar Jha, Advocate               

                                                                                  Shri A.K. Roy, Joint CDR

                                                                                   CESTAT, New Delhi.

R U L I N G 

( By Mr. Somnath Pal, Member )

            Shri Kartar Singh Kochar, S/o late Shri Sucha Singh, resident of C-30, Usha Niketan, New Delhi-110016 (hereinafter referred to as the applicant) has filed an application for advance rulings in which originally three questions were raised.  The applicant is setting up a joint venture in pandal and shamiana business in New Delhi alongwith Ms. Deep Kaur who is a non-resident and who happens to be applicant's daughter.  Two of the three questions which were originally raised were subsequently reframed.  The revised three questions read as under :-

            During the hearing before us the Ld. Counsel representing the applicant stated that they are not pressing the third question and therefore advance ruling is being sought only in respect of the first two questions.

2.       We have heard the Ld. Counsel of the applicant and also the Joint CDR on behalf of the Commissioner.

3.         The first question is on the classification of the proposed service, namely, "supply of furniture, fixtures, lights and light fittings, PA system and other articles, without providing/supplying/erecting a pandal and shamiana".  The applicant has referred to clauses (a) to (zzy) of sub-section (105) of section 65 of Chapter-V of the Finance Act, 1994 as amended from time to time (in short, the Act).  On perusal of these clauses it appears to us that the only possible entry which may be considered in the context of the type of service that has been mentioned in the question by the applicant is clause (zzw).  This clause reads as under :

"to a client, by a pandal or shamiana contractor in relation to a pandal or shamiana in any manner and also includes the services, if any, provided or to be provided as a caterer".

            Sub-section (105) of section 65 of the Act defines "taxable service" in the context of various types of services which are provided or to be provided as has been enumerated in different clauses under this sub-section.  From the language of the question framed by the applicant, one possibility appears to be that the applicant is envisaging a situation in which he would not himself provide, supply or erect a pandal but would only supply furniture, fixtures etc. to a pandal or shamiana (provided, supplied or erected by some other person).  The other possibility may be that the applicant would supply furniture, fixtures etc. to a place which is not a pandal or shamiana as defined in sub-section (77a) under section 65 of the Act.  We would examine the issue from both these angles.

4.         The term "pandal or shamiana contractor" has been defined in sub-section(77b) under section 65 of the Act, as meaning "a person engaged in providing any service, either directly or indirectly, in connection with the preparation, arrangement, erection or decoration of a pandal or shamiana and includes the supply of furniture, fixtures, lights and lighting fittings, floor coverings and other articles for use therein".  Sub-section (77a) defines "pandal or shamiana" as "a place specially prepared or arranged for organizing an official, social or business function".   It needs to be noted at this stage itself that supply of "PA system and other articles" [connected with sound system] is not included in the definition of "pandal or shamiana contractor".

5.         From the definition of "pandal or shamiana contractor" it is clear that a person engaged in providing any service to a client, either directly or indirectly, would be treated as a pandal or shamiana contractor as long as he is engaged in providing a service in connection with the preparation, arrangement, erection or decoration of a pandal or shamiana.  The second part of this definition which is inclusive in nature covers supply of furniture, fixtures, lights and lighting fittings, floor coverings and other articles for use therein.  The words "for use therein" reaffirms the proposition that such supply has also to be in connection with preparation, arrangement, erection or decoration of a pandal or shamiana.  In other words, the type of service which a person has to provide in order to become a pandal or shamiana contractor would necessarily be in connection with a pandal or shamiana as defined in sub-section (77a) of section 65 of the Act.  As long as this criterion is satisfied, the person will be covered by the definition of pandal or shamiana contractor and any of the aforementioned services provided by such a contractor to a client either directly or indirectly,  will be classifiable as a taxable service under clause (zzw) of sub-section (105) of section 65 of the Act.  It is not necessary that a person who is providing any service, whether directly or indirectly, in connection with the preparation, arrangement, erection or decoration of a pandal or shamiana or supplying furniture, fixtures, lights and lighting fittings, floor coverings  and other articles for use therein, would have to provide, supply or erect a pandal or shamiana himself to qualify as a pandal or shamiana contractor.  In order to do so, any service which he provides has to be in connection with a pandal or shamiana (may be provided, supplied or erected by some other person) as envisaged in the definition of "pandal or shamiana contractor".  Therefore, even if the applicant does not provide, supply or erect a pandal or shamiana, any service provided by him, either directly or indirectly, to a client in connection with the preparation, arrangement, erection or decoration of a pandal or shamiana, including supply of furniture, fixtures, lights and lighting fittings, floor coverings and other articles for use therein, would be classifiable as taxable service under clause (zzw).

            As regards the other possibility, the answer follows as a corollary to the above.  Mere supply of furniture, fixtures, lights and lighting fittings, floor coverings and other articles for use, for a place which is not a pandal or shamiana as defined in sub-section (77a) will not bring the supplier within the definition of a pandal or shamiana contractor and in the result such service will  not be classifiable under clause (zzw) as a taxable service.

6.         Turning now to the second question, we find that this has been raised by the applicant treating the communication F.No. B2/8/2004-TRU, dated 10^th September, 2004 (wrongly quoted by the applicant as B2/A/2000/TRU in the reframed question no. II in the written submission before the Authority), issued under the signature of Joint Secretary(TRU), Ministry of Finance, Department of Revenue (Tax Research Unit) as an exemption notification.   Perusal of this letter makes it clear that this has been issued as an internal communication to the senior officials in charge of various field formations under the Revenue Department, explaining the scope of the changes brought in with the enactment of the Finance Bill (No.2), 2004 w.e.f. 10.9.2004.  The entire explanation is in the context of new services which came under the service tax levy with the aforesaid enactment.  This communication, by no stretch of imagination, can be treated as an exemption notification which can be issued by the Central Government under section 93 of Chapter-V of the Act.  The particular sub-para, namely, 11.4 in this letter which has been relied upon by the applicant is only in the form of a clarification for the guidance of the field officials and in no way can be treated as a notification granting exemption under Section 93 of the Act.   In fact, where reference has been made in this clarificatroy letter to abatement/exemptions, say, as in sub-para 11.3, the corresponding notification no. has been  specifically indicated.  We are, therefore, not in a position to agree with the applicant's contention that this question is covered by section 96C(2)(d) which permits an applicant to raise a question on "applicability of notifications issued under Chapter-V".  This being the position, we have no other alternative but to hold that no advance ruling can be pronounced on this question.

7.         Having carefully considered the matter, we rule on the aforementioned  two questions, as follows :-

Qn.I     As long as the supply of furniture, fixtures, lights and lighting fittings is in connection with the preparation, arrangement, erection or decoration of a pandal or shamiana as defined in sub-section (77a) of the Act, the applicant would be covered by the definition of 'pandal or shamiana contractor' given in sub-section (77b), no matter whether or not the applicant himself provides/supplies/erects the pandal or shamiana.  In that event, supply of above items by the applicant to a client would be classifiable as a taxable service under clause (zzw) of sub-section (105) of section 65 of the Act, otherwise it will not fall under that clause.  Supply of "PA system and other articles" [connected with sound system] is not covered by the definition of 'pandal or shamiana contractor' and hence this would not come within the purview of clause (zzw) of section 65(105) of the Act.

Qn.II     This is not covered by section 96C(2)(d) of the Act and hence no advance ruling can be pronounced thereon.

Pronounced in the open court on the 23^rd day of August, 2005.