TMI Blog2022 (2) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... ng service tax separately on the license fee. The staff or hawkers of the respondent assesee move in the trains or at the station offering food for sale to the passengers. The passengers are under no obligation to buy food from the respondent. Thus, it is found that the transaction between the respondent assessee and the passenger who purchases the food is a simple sale transaction of food involving no element of service. In the present case, there is no element of service involved in the sale of food by the respondent assessee to the passengers. Further, it is found that the law has been clarified and declared by Hon ble Delhi High Court in the case of IRCTC and accordingly, the respondent assessee is rightly entitled the refund of the service tax paid under erroneous advice, subject to passing the test of unjust enrichment. The pendency of appeals of the service tax department as well as M/S INDIAN RAILWAYS CATE. TOUR. CORP. LTD. VERSUS GOVT. OF NCT OF DELHI ORS. [ 2011 (10) TMI 762 - SC ORDER] before Hon ble Supreme Court have got no bearing in the facts and circumstances of the present case. In the facts of the present case, no machinery provision was also there for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... besides sale of packed food items/beverages at stalls at railway stations. The hawkers of the respondent carry food with them for sale and if any passenger desires, the same is sold at the specified price. The respondent is not appointed by the passengers and there is no obligation on the passengers to buy food. The respondent is registered with the service tax department under the provisions of Finance Act, 1994 read with the rules. Under the erroneous advice, the respondent deposited the service tax under the head ‗outdoor catering service . 3. Hon ble Delhi High Court in the aforementioned judgment, look notice of the fact that IRCTC - a PSU had taken catering contract from Indian railways, on board the trains (Rajdhani and Shatabdi). IRCTC has further appointed sub contractors on back to back basis for the actual supply of food and beverages to the passengers under the main contract. The consideration for such supply of food and beverages is included in the fare (composite) charged by Indian railways from the passengers. IRCTC is paid by the railway. IRCTC have been paying VAT/sales tax in respect of such supply of food and beverages till 30 April, 2007. Thereafter as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt, that in case it is held that the services provided by IRCTC along with food and beverages, amount to sale of goods, the provisions of Section 65(105)(zzt) of Finance Act, 1994 be declared ultra vires. Further, quashing of the assessment order for the period 2007-2008 as well as the determination order passed by the Commissioner, VAT was also prayed, and further order for restraining the respondent from levying sales tax/ VAT on the supply/services provided by the IRCTC. Union of India was also respondent No. 3 and 4 in the writ application, represented by their standing Counsel, however, no counter affidavit was filed by the Union of India. 4. The Hon ble Delhi High Court with its final order dated 19 July, 2010 held that the transaction between IRCTC and Indian railways cannot be said to be composite transaction involving sale of goods as well as providing of services. It was further held under the facts and circumstances, when the food and beverages are loaded on the train and the same are kept in the containers, hot box, cold box etc. as provided by the railways, property in the goods is transferred. Since there is transfer of goods by IRCTC to Indian railways for conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not dispute the claim of refund on merits, but rejected the refund claim on the ground of unjust enrichment. It was further held that refund application is not maintainable in view of Section 73A(2) of the Finance Act, 1994, which, provides that even the service tax wrongly collected has to be deposited with the exchequer, and cannot be retained. 6. Being aggrieved, the appellant preferred appeal before the Commissioner (Appeals). The Commissioner (Appeals) was pleased to observe that so far taxability of the service tax is concerned on the sale of food in trains, the said issue stand decided in favour of the respondent assessee by Hon ble Delhi High Court, in its ruling in the case of IRCTC (supra). Further observing that the only issue remains is whether the refund claim is hit by the doctrine of ‗unjust enrichment or not. The Assistant Commissioner has observed that as per the balance sheets for the period 2006-2007 to 2009-2010, M/s Foodworld have not reflected the amount as ‗service tax recoverable . Further contention of M/s Foodworld was noted that they have not collected any service tax and have paid service tax from their own pocket. M/s Foodworld has urg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. Therefore, the judgment delivered by Hon ble Delhi High Court is not squarely applicable to them. It is further urged that judgment of Hon ble Delhi High Court has not attained finality inasmuch as IRCTC as well as the service tax department has filed SLP before Hon ble Supreme Court which have been admitted by order dated 21.10.2011 and converted to Civil Appeal Nos. 8970-8977 of 2011. The issue is subjudice before the Supreme Court, is that the services provided by IRCTC fall under the category of outdoor catering. Further such service provided by IRCTC on board the train is a composite package of services incapable of being segregated, in which food and beverages form part of a lump sum consideration. Further judgment of Hon ble Delhi High Court in IRCTC is contrary to the ruling in Bharat Sanchar Nigam Limited of the Apex court, wherein it is held that in case of composite contract, where the dominant object is to render service and not sale, as in case of IRCTC, no sales tax would be leviable. Further contended that the service provided on board both by the IRCTC and/ or contractor consists of a bundle of services, there is no break up of ticket cost into travel servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g STC No.AAAFF497EST001 and is mainly engaged in the business of sale of food on board the trains run by Indian Railways (under license). The hawkers of the respondent carry food (ready to eat) with them and if any passenger desires, the same is sold at the specified price. The Respondent is not appointed by the passengers and there is no obligation on the passengers to buy food. The Respondents are also stated to be engaged in sale of packed food items/beverages at stalls at railways stations. The present case pertains to sale of packed food on board the train, by the hawkers of the Respondents. 9.3. This factual position has not been disputed by the Appellant Department. It is matter of common knowledge, the modus operandi of the food hawkers on board the trains. The period of dispute is 2006-07 to 2009 -2010. 9.4. The Hon ble High Court of Delhi in Indian Railways C. T. Corpn. Ltd. Vs. Government of NCT of Delhi 2010 (20) STR 437 (Delhi) (hereinafter referred to as the IRCTC Case) held that sale of food on board the trains is a transaction of pure sale, and hence no service tax is leviable. Further, the Hon ble High Court even directed that any amount wrongly paid as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is no mechanism under service tax to compute the value of the alleged service under the provisions of the Finance Act, 1994 or the rules made thereunder. 11. For deciding the present appeal, we deem it appropriate to frame the following questions:- A. Whether the present transaction is one of sale of goods, and whether the transaction or any part of it can be subjected to service tax. B. Whether the Finance Act, 1994 or the Rules made thereunder contain any machinery for determination of value of service component in a transaction like the present one. C. Whether pendency of appeal before the Supreme Court (in IRCTC) or the Respondent assessee not being a party to it, can make any difference in application of the jurisdictional High Court judgement, to the case of the assessee-Respondent. D. Whether in the absence of any amendment to the Service Tax assessment, a refund can be sanctioned. 12. Before deciding these issues, we consider appropriate to extract the relevant provisions as they existed during the material period: Constitutional Provisions Prior to 101st Constitutional Amendment Act 1. VAT i.e. Sales Tax is imposable by the State under E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced in Service Tax (Determination of Value) Rules, 2006, vide Notification No.24/2012-ST, dated 06.06.2012 (w.e.f. 01.07.2012). The same reads as under:- 2 C. Determination of value of service portion involved in supply of food or any other article of human consumption or any drink in a restaurant or as outdoor catering- Subject to the provisions of the activity at a restaurant or as outdoor catering, shall be the specified percentage of the total amount charged for such supply, in terms of the following Table, namely:- Sl.No. Description Percentage of total amount 1. 2. 3. 1. Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating is supplied in any manner as a part of the activity, at a restaurant. 40 2. Service portion in outdoor catering wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale transaction of food involving no element of service. We find that the facts in the present case are even better than the facts in the case of IRCTC. Accordingly, we hold that there is no element of service involved in the sale of food by the respondent assessee to the passengers. Further we find that the law has been clarified and declared by Hon ble Delhi High Court in the case of IRCTC and accordingly, the respondent assessee is rightly entitled the refund of the service tax paid under erroneous advice, subject to passing the test of unjust enrichment. We further hold that the pendency of appeals of the service tax department as well as IRCTC before Hon ble Supreme Court have got no bearing in the facts and circumstances of the present case. 15. Further we find that in the facts and circumstances in the transaction of sale, as in the facts of the present case, no machinery provision was also there for bifurcation of the transaction into service portion and sale portion, for levy of service tax. We find Rule 2C was introduced in the Service Tax Determination of Valuation Rules, 2006 with effect from 1 July, 2012 vide Notification No. 24/2012-ST, which has provided for mo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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