Service Tax leviable on activity of preparation of place to hold event by erection of pandal and shamiana, CBEC clarifies

Hiring/Erection of Pandal or Shamiana in events/functions does not amount to ‘transfer of right to use’ and is, therefore, liable to service tax

Facts: The process of erection/laying of Pandal or shamiana for organizing event or function is a reasonably specialized job and is carried out by the supplier with the help of his own labour. In addition to the erection of pandal or shamiana the service is generally coupled with other services like supply of crockery, furniture, sound system, lighting arrangements, etc.

Issue Involved: Whether service tax is leviable on the activity of preparation of place for organizing event or function by way of erection/laying of pandal and shamiana ?

Clarification: Yes, it is liable to service tax for the following reasons:

• it is a service of preparation of a place to hold a function or event ; 
• effective possession and control over the pandal or shamiana remains with the service provider, even after the erection is complete and the specially made–up space for temporary use handed over to the customer. 
• the activity of providing pandal and shamiana along with erection thereof and other incidental activities do not amount to transfer of right to use goods ; 
• hence, activity by way of erection of pandal or shamiana is a declared service, under section 66E(f).