TMI Blog2010 (9) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to the aspect of undue hardship before us, we direct the appellant to make pre deposit of Rs. 60.00 lakhs - 462 OF 2010 - 210 of 2010 - Dated:- 27-9-2010 - CORAM : Hon'ble Shri D.N. Panda, Judicial Member Hon'ble Shri Rakesh Kumar, Technical Member STAY ORDER Per D. N. Panda : The appellant filing appeal against the following consequences arising out of order of adjudication passed on 8.1.2010, relating to the period 1.4.2008 to 31.3.2009 has also moved stay application praying for stay of realization of the demand during pendency of the appeal:- (1) Benefit of Notification No. 12/2003-ST dated 20.06.2003 was denied and of Service Tax short paid amounting, to Rs. 1,29,44,543/- (Rs. One crore, twenty nine lacs, forty four thousand, five hundred and forty three only) was levied under proviso to Section 73 of Chapter V of Finance Act, 1994, followed by interest at the applicable rate on the service tax demanded under section 75 of Chapter V of Finance Act, 1994. (2) Penalty of Rs. 200/- (Rupee Two Hundred ) per day or 2% of Service Tax per month was levied till payment of tax subject to condition that the penalty amount shall not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax/VAT, no service tax was payable on the value of such food and beverages. The appellant was entitled to claim deduction of value of goods and beverage sold to the customers in the banquet hall in terms of notification No. 12/2003-ST. (B). The appellant was entitled to avail exemption under either Notification No. 12/2003-ST or Notification No. 1/2006-ST, whichever was beneficial to them. Department cannot compel them to avail abatement under Notification No. 1/2006-ST. (C). The appellant was maintaining separate accounts and raised invoices for sale of food and beverages served in the banquet halls for which Notification No. 12/2003-ST was more specifically applicable to the appellant than Notification No. 1/2006-ST. (D). It was alternatively contended by the Appellant that if the appellant is not granted exemption under Notification No. 12/2003-ST, they should be allowed exemption under Notification No. 1/2006-ST and the appellants agreed to reverse the Cenvat credit availed on input services used for mandap keeper services. (E). According to the Appellant a contract involving supply of goods and services cannot be artificially vivisected and service portion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible at the applicable rate on the gross value subject to fulfillment of the following conditions:- (i) the CENVAT credit of duty on inputs or capital goods or the CENVAT credit of Service Tax on input Service, used for providing such taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004, or (ii) the service provider has not availed the benefit under notification of the Government of India in the ministry of Finance (Department of Revenue) No. 12/2003-ST dated 20.06.2003. For this purpose, the expression 'food' has been defined to mean a substantial and satisfying meal. The term 'meal' generally denotes either lunch or dinner or both. The definition also emphasizes that it should be "substantial and satisfying". 3.1. Learned Adjudicating Commissioner heard the appellant thoroughly and adjudicated the matter confirming the demand proposed by show cause notice as aforesaid. He noticed in para 21 of the order that the appellant was providing packaged service to the service recipient. His observation reads as under:- "In the instant case of the Noticee, I find that the Noticee is in fact providing a package of services in which both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the following submissions; "That once a contract is for both, the supply of food as well as Mandap keeper's service, the clients are interested only when both the Mandap keepers's service is provided along with supply of food. Transaction cannot be vivisected as client is not interested in performance of individual job. Both the activities are the integral form of the contract Such a composite contract cannot be vivisected and serviced part of it subjected to service tax under 'Mandap keepers service'. Thus, the Mandap keeper service and supply of food forms the integral part of the contract and cannot be artificially vivisected so as to levy service tax on a pert of service under a particular category of taxable service." 3.3. Learned Commissioner discarded the plea of separation of catering receipts from Mandap keeper service receipts in para 22 of adjudication order. Receipts from both activities were aggregated to determine taxable valje of service of "Mandap Keeper" provided by the appellant and service tax was levied on the ground that thse two activities were inseparable from each other and catering service was not works contract. Maintenance of separate account b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appearing on behalf of trie appellant reiterating the contentions made before the learned adjudicating authority as well as grounds of appeal, challenged the order of adjudication on the following ground: (A). That catering services provided is sale of goods on which VAT was paid by the appellant as a registered dealer under VAT law for which value received towards catering is not taxable according to the terms of Notification No. 12/2003 - ST dated 20.6.2003. (B). Food bills were issued separately for the food supplied and mandap services were billed differently without clubbing both receipts together in view of applicability of above Notification. (C). Both contracts were separate and such factual position was informed to the authority in terms of an earlier letter. When a contract is divisible to tax the services involved therein as has been held by Larger Bench in the case of BSBK's case - 2010 (18) STR 555 (LB), the appellant is entitled to the ratio laid down in paras 8 and 11 of that judgment of the Tribunal since entire mandap keeper service if includes catering, no tax is leviable on catering involving sale of food. (D). Drawing to attention reference made to La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itimate due of service tax was evaded. Accordingly show cause notice was issued bringing the appellant to the charge. (C). Granting fair opportunity of hearing, adjudication order was passed with the consequence of law as mentioned in the adjudication order. (D). Revenue detected that Notification No. 12/2003 -ST dated 20/06/2003 was abused by the appellant and failed to pay service tax on catering service. Penalty was accordingly imposed while demanding service tax. (E). The citations made by appellant is of no help to them in view of direct judgment of Apex Court in Tamil Nadu MandapAssn's case or the issue directly involved in this case and that has been followed by Hon'ble High Court of Kerala in the case of Saj Flight Services Pvt. Ltd. Vs. Superintendent of Central Excise - 2006 (4) STR 429 (Ker). (F). It has been held by the Hon'ble Kerala High Court in Para 5 of the judgment in 2006 (4) STR 429 (Ker) that payment of sales tax treating the transaction partly as sale of goods does not exonerate the petitioner from liability for service tax under Central legislation which is upheld by the Supreme Court. Since service of food and beverages by the caterers to aircraft am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear the contractor has paid nothing but made his profits from the shop and walked out. We have come across cases where dealers in food grains and essential commodities have been allowed to take back the stocks seized from them as if to permit them to continue to indulge in the very practices which were to be prevented by the seizure. We have come across cases where land reform and important welfare legislations have been stayed by courts. Incalculable harm has been done by such interim orders. All this is not to say that interim orders may never be made against public authorities. There are, of course, cases which demand that interim orders should be made in the interests of justice. Where gross violations of the law and injustices are perpetrated or are about to be perpetrated, it is the bounden duty of the Court to intervene and give appropriate interim relief. In cases where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizen's faith in the impartiality of public administration, a Court may well be justified in granting interim relief against public authority. But since the law presumes that public authorities function proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... keeping in mind the presumption regarding the constitutionality of the legislation and the vulnerability of the challenge, only in order that no irreparable injury is occasioned. The Court has therefore to strike a delicate balance after considering the pros and cons\ of the matter lest larger public interest is not jeopardized and institutional embarrassment is eschewed."[Emphasis supplied] I 8. Section 65(105)(m) of the Finance Act, 1994, states that service provided or to be provided to any person, by a mandap keeper inrelation to the use of mandap in any manner including the facilities provided or to be provided to such person in relation to such use and also the services, if any, provided or to be provided as a caterer to be "taxable service" under that Act. When the Constitutionality of such levy-was challenged, the Constitution Bench of Apex Court in the case of Tamil Nadu Kalyan Mandap Assn. V. Union of India - 2006 (3)STR 260 (SC) held that the nature and range of service provided by mandap keeper is essentially that of providing variety of services and facilities in any manner including provision of service of catering in relation to the use of the mandap and establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onceptually or otherwise includes the supply to services within the definition of sale and purchase of goods. This is particularly apparent from the phrase contained in the said sub-article "such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods". In other words, the operative words of the said sub-article is supply of goods and it is only supply of food and drinks and other articles for human consumption that is deemed to be a sale or purchase of goods. 11. The statutory definition u/s 65 (105) (m) of the Finance Act, 1994 has taken into its fold the services provided 'relation to use ofMandap in any manner" and includes "the facilities provided or to be provided to any person in relation to such use" and also the services"provided or to be provided as a caterer". It has been held by Apex Court in Para 45 of the judgment in the case of Tamil Nadu KalyanMandap Assn.'s case - 2006 (3) STR 260 (SC) that it is well settled that the measure of taxation cannot affect the nature of taxation and, therefore, the fact that service tax is levied as a percentage of the gross charges under the category of "mandap keeper service" for catering c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... becoming a decree under Section 17 thereof and also appeal arising thereunder. The contention that if it is accepted that the expression "in relation to arbitral proceedings" would include proceedings for the enforcement of the award as well, the second limb of Section 85(2)(a) would become superfluous and cannot be accepted/' (D). The phrase "including" has also been construed to expand the definition as held by this Court ; nRegional Director, Employees' State Insurance Corporation v. High Land Coffee Works of P.F.X. Saldanha and Sons Ann (1991) 3 SCC 617 at 618 observed as under : "The word "include" in the statutory definition is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not with restriction. The word "include" is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include." 13. Taxable services u/s 65 (105 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle 366 (29A) (b) for levy of sales tax leaving the service element for taxation by Finance Act, 1994. Appellant's argument for segregation of goods from service is undisputed and legislature have done so, while issuing Notification No. 01/2006 dated 01/03/2006 prescribing abatement to tax only a part of gross value of mandap keeper service which includes catering following Apex Court decision in Tamil Nadu Kalyan Mandap Assn's case (supra). Reference in the case of Agarwal Colour Lab's case having been made toHon'ble President of Tribunal to pass appropriate order for reference if any desirable, it would not be proper to comment on that issue at this stage prematurely. However that case deals with valuation of service which is not the case in the present appeal. 16. Appellant relied on the decision in Daspalla Hotel Case reported in - 2010 (18) STR 75 (Tri-Bang). Following its earlier decision in Sky Gourmet Pvt. Ltd. - 2009 (14) STR 77 (Tri - Bang) it was held by the Bangalore Bench that when sales tax has been paid on food, beverage etc. no service tax was payable on value of such goods. That decision does not say that service element involved in catering is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and has been done in a compounding manner in terms of Notification No. 01/2006-ST dated: 01/03/2006. 19. Learned counsel's argument that because Bangalore Bench of Tribunal has held in favour of assessee in the case cited by the appellant, pre deposit should be waived in the present case does not appeal to us when Apex Court in the case of Vishnu traders Vs. State of Haryana And Others cited by appellant has laid down the law that factual difference require a different treatment. Also Apex Court in the case of Empire Industries' case - 1985 (20) ELT 179 (SC) held that it is a matter of common knowledge that the interim orders passed by particular courts on certain considerations are not precedents for other cases may be on similar facts. Every Bench hearing a matter on the facts and circumstances of each case should have the right to grant interim orders on such terms as it considers fit and proper and if it had granted interim order at one stage, it should have right to vary or alter such interim orders (Ref: Para 55 of the judgment). Law being well settled in Tamil Nadu Kalyan Mandap's case (supra) and following Apex Court's decision in Duniop India 1985 (19) ELT 22 (SC), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by a Mandap Keeper or by a hotel as Mandap Keeper from the service tax, as is in excess of the amount of service tax calculated, which is equivalent to 60% of gross amount charged for the service, subject to conditions that - (i) the Mandap Keeper aiso provides catering services/ that is supply of food and the invoice, bill or challan issued indicates that it is inclusive of the charges for catering service ; (ii) no Cenvat credit of duty on inputs or capital goods or of service tax on input services used for providing the service in relation to use of Mandap has been taken under Cenvat Credit Rule, 2004 ; and (iii) benefit of Notification No. 12/03-ST dated 20/6/07 has not been availed. Thus, by virtue of this exemption notification, the effective rate of service tax in case of service in relation to use of Mandap, subject to following the conditions prescribed, is the service tax at the rate prescribed in Section 66 on 60% of the gross amount charged. 21.1.4Notification No. 12/03-ST dated 20/6/03 issued under Section 93 (1) of the Finance Act, 1994, is a general exemption, which exempts a taxable service provided from the tax equal to the service tax on the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1979) 1 SCR - 557 wherein the Hon'ble court held that serving of food or drink by a restaurant to his customers did not partake of the character of a sale of goods, observing that "what the customer pays for is a right to. satisfy his appetite by consumption and what he pays for includes more than the price of the food as such - it includes all that enters into the conception of service, and with it, no small factor of direct personal service. It does not contemplate the transfer of general property in food supplied as a factor in the service rendered." (2) Hon'ble Supreme Court's judgment in case of K. Damodarswamy Naidu Bros. vs. State of Tamil Nadu reported in (2000) 1 SCC- 521, wherein similar view was expressed. (3) Judgment of Hon'ble Supreme Court in case of State of Punjab vs. Associated Hotels of India reported in (1972) 1 SCC - 472wherein on the question as to whether sale of food is involved and thereby attracting the sales tax when a hotelier serves meals also to his guest during his stay in the Hotel, Hon'ble Supreme Court held that the transaction of a hotelier with his guest staying in the hotel is of service of receiving a customer in the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the food and drinks served by the way of or as part of any service, cannot be extended to expand the scope of the word "Sale" in the Service tax exemption notification No. 12/03-ST, so as to cover deemed sales also. Exemption Notification No. 12/03-ST is applicable only to those transactions of service which involve a distinct sale of goods within the meaning of this term, as defined in Section 2 (h) of the Central Excise Act, 1944 read with Section 65 (121) of the Finance Act, 1994 or in Section 4 of the Sale of Goods Act, 1930 and the benefit of this exemption cannot be extended to the service transactions not involving any sale as defined in Section 2 (h) of the Central Excise Act, 1944/Section 4 of the Sale of Goods Act, 1930 by invoking the legal fiction of Article 366 (29A) (f)- In this case, just by splitting up the invoices for service in relation to use of Mandap into the invoice for food and drink served and for use of Mandap, the Appellant cannot claim that they are selling the food and drink, as the price charged for supply of food and drink is loaded with the value of various services and is in fact, the price for catering service, not for sale of food and drinks. W ..... 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