The Hindu Business Line : Within church precincts

We have a community hall adjoining our church premises. This hall is let out for social and cultural functions, holding of exhibitions, conferences, etc. There are no prescribed changes for using the hall. The users are required to donate according to their willingness for using the facilities. Are we liable to pay any service tax on the funds so collected?

Arul Raj, Chennai

Letting out a community hall for any social or business function will come under the category of services provided by a mandap keeper. Even when the hall is let out for holding cultural functions, if any consideration is received from the users for that purpose, then the same will be treated as rent and consequently service tax will be payable.

As per Service Tax Notification 14/2003, there is tax exemption when the precincts of a religious place are used as a mandap. The explanation to the notification defines a religious place as one meant for conduct of prayers or worship pertaining to a religion. Hence, if a marriage function is held inside the church premises, then there will not be any service tax liability. If the same is conducted in the community hall adjoining the church premises and charges are received for permitting the use of the hall, then service tax will be attracted.

(Send in your queries on service tax, excise and Customs to MentorAtYourService@gmail.com. Blog at: http://MentorQA.blogspot.com)

S. Murugappan

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