Marriage, no holy service

It is said that marriages are made in heaven, but so are thunder and lightning. Definitions of marriage range from being a social institution to the legal or religious ceremony that formalises the decision to form the social institution. The Delhi High Court, which seems to be getting quite a few service-tax cases to resolve, was recently asked to judge a quixotic question — whether a marriage according to the Hindu Marriage Act is a religious or a social function? The petitioner, All India Tent Dealers' Welfare Association, had asked the question under the service tax laws, which state that pandal and shamiana contractors will have to collect and pay service taxes only if it was a social function. The Hindu Marriage Act, 1955 does not define a marriage, though it does mention briefly about the ceremonies for a Hindu marriage.

definition

The welfare association said no service tax could be levied on the erection of a pandal or shamiana for a Hindu marriage is fundamentally a sacrosanct and sacred religious function and can never be treated as a social function. The service tax provisions leave no doubt about the coverage of the levy — pandals or shamianas have been defined to mean a place specially prepared or arranged for organising an official, social or business function. An explanation clarified that social function includes marriage for the purposes of this clause.

A pandal or shamiana contractor is a person who provides any service, either directly or indirectly, in connection with the preparation, arrangement, erection or decoration of a pandal or a shamiana and includes supply of furniture, fixtures, lights and light-fittings, floor coverings and other articles for use therein.

Court decision

The Delhi High Court opined that if the entire provision is properly understood it is clear that a Hindu marriage is not treated or regarded a social function per se . If the dictionary clause is appositely appreciated, there can be no trace of doubt that only when a pandal or a shamiana is used for marriage, it earns the status of social function because of the service component involved. The statute itself postulates that marriage is to be regarded as a social function and full effect has to be given to the same.

That apart, the prerequisite is the use of a pandal or a shamiana ; and, therefore, the welfare association's argument that Hindu marriage is not a contract but a sacred institution and hence, no service tax is imposable has to be repelled.

Though marriage functions have followed cricket in the sense that quick-fix versions are more popular than long-drawn-out versions and are more social and entertainment occasions, laws have always been benign to taxable services rendered under the religious category. An old decision of the Bangalore Tribunal (Krishnapur Mutt) held that marriage is sacred and a sacrament as recognised under Hindu law and is not a social contract. Consequently, padakanikas collected for renting out premises for marriages and other religious functions can't be taxed.

The draft negative list of services, proposed to be implemented in Budget 2012, attempts to solve this issue by having a single entry under the religious category — religious services provided by any person.

The proposed negative list has made a shift from religious institution to religious purpose.

At present, commercial activities undertaken by religious institutions, such as renting of immovable property, are exempted from service tax under the religious category. All such commercial activities could be taxed once the negative list is enacted without any further amendments.

(The author is a Bangalore-based chartered accountant.)

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