TMI Blog2014 (4) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... tering are provided by it at a place other than a place of the assessee. We find no merit in the contention that since the assessee is liable to pay Value Added Tax on the sale involved in the supply of goods at the canteen, it is not liable to the payment of service tax. The charge of tax in the cases of VAT is distinct from the charge of tax for service tax. Entry 54 of the State List to the Seventh Schedule to the Constitution empowers the state legislatures to impose a tax on the sale of goods. Article 366 (29A) was introduced by the Forty Sixth Constitutional Amendment so as to provide a deeming definition of the expression ''sale' to comprehend situations within the purview of its several sub-clauses including the sale of goods involved in the execution of a works contract. The charge of service tax is not on the sale of goods but on a taxable service provided. Unlike a tax which is imposed on the sale of goods, the charge of service tax is on the provision of a taxable service provided by the assessee. Hence, the fact that the assessee may be paying VAT on the sale of goods on the supply of food and beverages to those who consume them at the canteen, would not exclude the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Vs. Reliance Petro Products3, in which it has been specifically held that the penalty under Section 11AC of the Central Excise Act (which is in pari materia to Section 78 of the Finance Act, 1994) can only be imposed after recording the finding of fraud, collusion or any willful misstatement or suppression of facts or contravention of any provisions of the Act with intent to evade payment of duty. 2. The assessee is a Society registered under the Societies Registration Act, and had entered into agreements with National Thermal Power Corporation Limited (NTPC) and Lanco Infratech Limited (LANCO). Pursuant to an award of contract of 20 June 2008, NTPC entered into an agreement with the assessee for running and maintenance of an administrative building canteen. The total value of the contract was Rs. 36,94,824/-, the period of completion being two years. Clause 4 of the letter of award, stipulates that the service tax applicable would be reimbursed extra at actuals against the submission of documentary evidence. The rates for eatables to be served in the canteen of the administrative building were prescribed in Annexure-II. The letter of award contained other incidental con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee on 23 April 2012. The CESTAT, by its order dated 29 August 2013, has confirmed the order by dismissing the appeal. 4. The submission of the assessee in appeal is that (i) the activities of the assessee are covered by the main part of the definition of a tax on the sale or purchase of goods under Article 366 (29A) (f) of the Constitution and the assessee has paid Value Added Tax in respect of the supply of goods including beverages in the canteen to individual customers under the U.P. VAT Act; (ii) the assessee does not provide any service to NTPC or LANCO but only sells goods in their canteens to individual customers for which it is not liable to pay service tax as an outdoor catering service under Section 65 (76a) read with Section 65 (24) of the Finance Act, 1994; (iii) the assessee charges amounts in cash from individual customers for food, eatables and beverages supplied according to rates stipulated in the menu card and hence there is neither a supply of food, eatables or beverages to NTPC or LANCO nor is there any service provided to those authorities. NTPC and LANCO provide a place for running the canteen on rent and certain expenses for maintenance and running. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On the other hand, under the Finance Act 1994, the liability to pay service tax is attracted once a taxable service is provided. The assessee having provided a taxable service falling under Section 65 (105) (zzt), the liability to pay service tax was attracted; and (v) the penalty under Section 78 was validly imposed since the assessee suppressed information of having provided taxable services; failed to file returns and to discharge its liability to the revenue to pay service tax. 6. These submissions now fall for consideration. 7. Under Section 65 (105) (zzt) of the Finance Act 1994, the expression ''taxable service' is defined to mean any service provided or to be provided to any person by an outdoor caterer. The expression ''caterer' is defined in clause (24) of Section 65 as follows: caterer means any person who supplies, either directly or indirectly, any food, edible preparations, alcoholic or non-alcoholic beverages or crockery and similar articles or accoutrements for any purpose or occasion. The expression ''outdoor caterer' is defined in clause (76a) of Section 65 thus: outdoor caterer means a caterer engaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a place provided by way of tenancy or otherwise by the person receiving such services. NTPC and LANCO have engaged the services of the assessee as an outdoor caterer and the assessee is an outdoor caterer because services in connection with catering are provided by it at a place other than a place of the assessee. 10. Consequently, on a plain and literal construction of the provisions of Section 65 (105) (zzt) read with the definitions of the expressions ''caterer' and ''outdoor caterer' as contained in clauses (24) and (76a), it is evident that the assessee is subject to the levy of service tax. The assessee provides to any person, to wit, NTPC or LANCO, the service of an outdoor caterer. In our view, there is a fundamental fallacy in the submission of the assessee that it should be held not to fall within the definition of the expression ''outdoor caterer' on the ground that the food, edibles or beverages are provided not to NTPC or LANCO but to their employees, customers and guests. That, in our view, begs the question. The taxable catering service cannot, in our view, be confused with who has actually consumed the food, edibles and bevera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legislature evinced an intent to tax the supply of food and drink. This submission was rejected. It was also contended that a tax on food served in restaurants could not be levied on the total price charged to the consumer and the bill had to be split up between the charge for food and charge for service. The Supreme Court held that the tax under sub-clause (f) of Article 366 (29A) was on the supply of food or drink and it was not of relevance that the supply is by way of service or as part of a service. The judgment of the Supreme Court, in fact, supports the principle that a tax on the supply of food and drink is not a tax on service. It is the supply of food by the restaurant owner to the customer which is subject to levy though this may be part of a service which may be provided to the customer. 13. The judgment of the Supreme Court in Tamil Nadu Kalyana Mandapam Assn. Vs. Union of India Ors.5, was also sought to be relied upon. This decision involved a challenge to the constitutional validity of the provisions of the Finance Act 1994, insofar as they sought to impose a service tax on Kalyana Mandapams and Mandap keepers as defined in clauses (19) and (20) of Section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section 78 can be invoked, there has to be a case of (i) fraud; or (ii) collusion; or (iii) willful mis-statement; or (iv) suppression of facts; or (v) contravention with intent to evade the payment of service tax. In the present case, there has been no discussion in the judgment of the CESTAT on whether the fundamental conditions for the imposition of a penalty under Section 78 were fulfilled. In Rajeev Kumar Gupta Vs. Commissioner of Central Excise, Jaipur6, a Bench of the CESTAT at Delhi had held, albeit in a briefly reasoned decision, that the assessee who had engaged himself in the preparation and serving of food items at the premises of the company for which all the facilities were provided by the company, would not fall under the category of outdoor catering services. Undoubtedly, other decisions had taken a contrary view. (See in this connection, the judgment of a Division Bench of Kerala High Court in Saj Flight Services (P) Ltd. Vs. Superintendent of Central Excise7 and the decision of the Tribunal in Raj Kumar Jain Vs. CCE, Jaipur8. Having regard to the fact that there were contrary views which had held the field, a case for imposition of penalty was not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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