Service Tax on Services rendered at the time of Marriage

Cricket, Bollywood and Marriage – these are 3 businesses that keep thriving irrespective of whether the economy is booming or is in Recession. The Money involved in these 3 Industries has been growing at a very rapid pace and all these jobs are now Specialist Jobs.

We may consider the job done by a Floweriest as an odd-job to make a living but the matter of fact is that now times have changed and with high moolah being involved in Marriages, all the jobs of these Floweriests, Tents, Decorators are now specialist jobs which involve the application of skill.

As the Indian govt now plans to impose service tax on all types of services, the services rendered by Tent Decorators had also come under the Service Tax ambit and Tent Decorators are now liable to pay service tax on the services provided with effect from 10-09-2004 inserted by Section 90 of the Finance Act 2004

However, as per provisions of Section 135(A)(10) of the Finance Act of 2007, service tax is payable only for services provided to organise social functions and not religious functions.

The All India Tent Dealers Welfare Association had filed a writ petition with the High court and the Tent Service Providers contented that “no service tax can be levied on the erection of pandal or shamiana for a Hindu marriage is fundamentally a sacrosanct and sacred religious function and can never be treated as a social function to invite the levy of service tax.”

However, the court dismissed the petition of the All India Tent Dealers Welfare Association that Hindu Marriage is a Religious Function.

The bench comprising of Justice Dipak Misra and Justice Sanjeev Khanna dismissed the writ petition filed by Tent Decorators and the same now stands cancelled and thus Service Tax is payable on Services rendered by Tent Decorators at the time of Marriage at the rates mentioned below.

Particulars	Rate of Tax
Service Tax	10% of the Value of Services
Education Cess	2% of the Service Tax Payable i.e. 2% of 10% = 0.2% of Value of Services
Secondary and Higher Education Cess	1% of the Service Tax Payable i.e. 1% of 10% = 0.1% of Value of Services
Total Service Tax Payable	Total Service Tax Payable 10.3% of the Value of Services

However, nothing shall be included in the Value of Services provided for the expenditure and costs incurred as a pure agent of the recipient of service provided that the service provider acts as a pure agent of the recipient of service when he makes the payment to the third party and the recipient of such service has authorised the service provider to make payment on his behalf. (Rule 5(2) of Service Tax (Determination of Value) Rules, 2006)

This article has been authored by CA Karan Batra who is a finance and tax blogger on http://www.charteredclub.com