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2015 (6) TMI 917 - MADRAS HIGH COURT

2015 (6) TMI 917 - MADRAS HIGH COURT - 2015 (40) S.T.R. 89 (Mad.) , [2016] 87 VST 82 (Mad) - Waiver of pre-deposit - Outdoor catering services - Service tax not paid on catering services in respect of the Mail/Express trains - Notification No.2/2006-ST dated 1.3.2006 - Held that:- In view of the different views taken by two Courts i.e. Delhi high court in the case of INDIAN RAILWAYS CATERING & TOURISM CORPORATION LTD Versus GOVT OF NCT OF DELHI & ORS [2010 (7) TMI 174 - HIGH COURT OF DELHI] , Ke .....

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of service tax, which we find is still a debatable issue, we are inclined to modify the brief and non-speaking order of the Tribunal. - amount of pre-deposit reduced to 50% - Decided partly in favour of assessee. - C. M. A. Nos. 537 to 540 of 2015 - Dated:- 12-6-2015 - R. Sudhakar And K. B. K. Vasuki,JJ. For the Appellant : Mr. N. Sriprakash For the Respondents : Mr. V.Sundareswaran - R2 JUDGMENT ( Delivered By R. Sudhakar, J.) Aggrieved by the common order of the Tribunal ordering pre-deposit .....

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ent of the Hon'ble Delhi High Court reported in 20 STR 437 [M/s. IRCTC vs. Government of NCT of Delhi]? ii) Whether the CESTAT has committed an error of law in disregarding the factors relevant for disposal of a waiver-cum-stay application?" 2. The brief facts of the case are as follows: The appellant is a contractor and has been awarded a contract by M/s.IRCTC for supply of food and refreshments to the passengers on board the trains run by the Indian Railways. The catering services ren .....

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e tax payment from 1.3.2006 onwards. 3. It is seen that Writ Petitions have been filed before this Court challenging the vires of Sections 65(24), 65(76a) and 65(105)(zzt) of the Finance Act, 1994. This Court, by order dated 25.7.2001, upheld the vires of the above provisions, which was reported in 2001 (133) ELT 265 (Mad) (Tamil Nadu Hotels Association v. Union of India). 4. It is stated in the order-in-original that the appellant was paying service tax for the services provided to passengers o .....

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as follows: "12. I find that out door catering service provided on trains became liable to service tax levy with effect from 1.3.2006 and M/s.P.K.Shefi even though have rendered the catering service in trains, and have paid service tax on catering services (except cost of water, for which separate demand notices have been issued) provided to passengers on board the Rajdhani/Shatabdi Express but have not paid service tax on catering services in respect of the Mail/Express (i.e. other than Ra .....

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supply of food, service tax was payable on 50% of the gross value of the charges received, in terms of Sections 66&68 of the Finance Act, 1994 read with Notification No.1/2006-ST dated 1.3.2006." 6. The Adjudicating Authority relying upon the decision of the Apex Court in the case of Tamil Nadu Kalyana Mandapam Association V. UOI reported in [2006] (003) STR 260 came to hold that there was no difference in the service provided by the present appellant from the one provided by the outdo .....

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the factory management which are to be borne by the factory either fully or partially, also supplies food articles to the factory staff and workers and charges them directly. 15.3 Importantly, in the period from 10.09.2004 to 28.02.2006, out-door catering service provided on railway trains was exempted from the levy of service tax vide Notification No.19/2004-ST, dated 10.09.2004 and after withdrawal of this exemption vide Notification No.2/2006-ST dated 01.03.2006, Out Door Catering Service pr .....

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/38/2006-TRU dated 1st August, 2006, wherein it was clarified that the private contractor was required to pay service tax on the entire amount billed under outdoor catering service. 8. On the question whether the transaction is pure sale or the one involving both sale and service equally, the Adjudicating Authority relying upon the two decisions of the Karnataka High Court in the case of Commissioner of Service tax V. LSG SKY Chef India Pvt. Ltd. 2012 [27] STR 5 [kar] and Commissioner of Service .....

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of NCT of Delhi & Ors. reported in 2010 [20] STR 437 (Delhi) was a case of levy of Sales Tax/VAT and not on a direct service tax dispute. He further relied on the decision of the Kerala High Court in the case of SAJ Flight Services Pvt. Ltd. V. Superintendent of Central Excise reported in 2006 (04) STR 429 (HC-Ker.) and held that it is a clear case of levy of service tax. The Adjudicating Authority, therefore, gave a reasoned order holding that the supply of services along with food etc. re .....

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ion for waiver of pre-deposit. The Tribunal considering the ratio laid down in the case of Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes reported in 2008 (9) STR 337 (SC), ordered pre-deposit. For better clarity, the order of the Tribunal reads as follows: "1. Ld. Counsel vehemently opposes adjudication on the ground that services provided by appellant in railway trains along with food shall not bring the transaction to tax net under Finance Act, 1944. He relies on the decis .....

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by the apex Court in Imagic Creative Pvt. Ltd., vs. Commissioner of Commercial Taxes - 2008 (9) STR 337 (SC), appellant is directed to pre deposit the following amounts in the stay applications noted against each within 8 weeks from today and make compliance on 07.04.2015. S.No. Stay Petition No. Amount 1. ST/S/41785/2014 Rs.1,50,00,000/- 2. ST/S/41786/2014 Rs.75,00,000/- 3. ST/S/41787/2014 Rs.75,00,000/- 4. ST/S/41788/2014 Rs.75,00,000/- Upon compliance, there shall be waiver of pre-deposit of .....

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ating Authority that the decision of the Delhi High Court in the case of IRCTC v. Govt. of NCT of Delhi & Ors. reported in 2010 [20] STR 437 (Delhi) is in relation to sales tax and not directly relatable to service tax. Though several pleas have been taken by the appellant, the Tribunal relied upon the decision of the Apex Court in the case of Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes reported in 2008 (9) STR 337 (SC) and passed a brief order ordering pre-deposit. The pri .....

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e decision of the Delhi High Court and the contra view by the Kerala High Court on the issue, as to whether such transaction would be outdoor catering, liable for service tax, suppression cannot be alleged per se. 14. This contention is opposed by the learned standing counsel appearing for the respondent. The issue as to whether the liability to service tax in respect of the services rendered by the appellant would fall outside the purview of the service tax has to be considered by the Tribunal .....

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e considered, there is a substantial reduction in demand. This plea, however, has been taken before the Tribunal, but not before the Adjudicating Authority. Therefore, we leave the issue open to the assessee to contest the same on its own merits before the Tribunal. 15. The other plea taken by the counsel for the appellant is financial hardship. Learned counsel for the appellant submitted that the appellant is required more than Rs.one crore to provide the services and therefore, the demand in t .....

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The consideration of such services is included in the fare charged by the Indian Railways from the passengers and the Government company was paid by Indian Railways from what it termed as services including catering provided by it to the passengers. The Adjudication order dated 23.3.2006 passed by the Commissioner of Value Added Tax held that VAT was payable on the services provided on board the trains, since it amounted to sale within the meaning of Section 2(zc)(vii) of the Act. This finding o .....

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d then serving them to the passengers is purely incidental and minimal required for sale of food and beverage in a transaction of this nature. There is no privity of contract between to petitioner-company and the passengers travelling in trains. No package of services is being provided to Indian Railways, by the petitioner-company. It is neither a contract for providing service nor a composite contract for sale/supply of goods and providing of service by the petition-company to Indian Railways. .....

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sions, been held to be a sale, despite the Court taking the view that the customer had no right to take away the unconsumed food, these is no good reason to take a different view in a transaction involving a train passenger, to whom even such a disability is not attached." 17. As a corollary, it also held that it is for the petitioner to claim refund of the service tax already paid in respect of such transaction. The Delhi High Court further came to the conclusion as follows: "54. For .....

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e goods are loaded in the trains. Accordingly, we find no merit in the writ petitions and the same are hereby dismissed. It will, however, be open to the petitioner to claim refund of service tax already paid by it in respect of such transactions. If the refund is declined, the petitioner will be at liberty to initiate such proceedings, as may be open to it in law in this regard. If service tax is sought to be levied, upon the petitioner, in future, in respect of such transactions, it will be op .....

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