TMI Blog2022 (4) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... parate contracts and has been discharging Service Tax on the income received under the agreement for rendering the services. They have been paying Sales Tax / VAT on the amounts received for the supply of food. The case of the Department is that the value of these two contracts has to be clubbed together and after giving the abatement of 50% in terms of Notification No. 01/2006-S.T. dated 01.03.2006 the appellant has to discharge its Service Tax liability. The levy of Service Tax under Outdoor Catering Services would be attracted only if the activity involved serving of food and not mere sale of food. In COMMR. OF SERVICE TAX, PUNE-I VERSUS BINDRAS HOSPITALITY SERVICE PVT. LTD. [ 2019 (3) TMI 1854 - CESTAT MUMBAI] it was held that sale of cooked food to the employees at the counters would not be taxable under Outdoor Catering Services. When the value of food items have already been subjected to Sales Tax / VAT, we do not think that it is correct to levy Service Tax on the said amount again. The Tribunal in the case of M/S. GOLDLINE HOSPITALITY SOLUTIONS (P) LTD. VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, CHENNAI SOUTH COMMISSIONERATE [ 2019 (1) TMI 1309 - CESTAT CHE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inable in law as all their activities were known to the Department. (e) However, they informed that without prejudice to their stand that sale of food is not chargeable to Service Tax, to avoid disputes at a later stage, they have paid an amount of ₹ 19,20,486/- along with interest of ₹ 1,39,749/- on 08.02.20211 according to the liability worked out by them from October 2009 to December 2010. 3. After perusal of the above reply, the Department was of the view that prior to 01.04.2007 also the appellant has not only supplied food, but also rendered services in connection with the supply of food. That after 01.04.2007 they have not correctly arrived at the taxable value. A Show Cause Notice dated 11.04.2011 was issued to the appellant proposing to demand Service Tax to the tune of ₹ 61,57,841/- for the period from October 2005 to December 2010 along with interest and also for imposing penalties. It was also proposed in the Show Cause Notice to appropriate the amount already paid by the appellant along with interest. After due process of law, the Original Authority vide order impugned herein confirmed the demand of ₹ 61,57,841/- along with interest and im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not attract Service Tax as it involves the value of food also. 4.3.1 He submitted that the levy of Service tax and the levy of VAT are mutually exclusive, as has been held by the Hon ble Supreme Court in the case of M/s. Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes reported in 2008 (9) S.T.R. 337 (S.C.). The appellant having entered into separate agreements for the supply of food and for the activity of serving food, the value of food which has been subjected to Sales Tax / VAT cannot again be taken for calculating the Service Tax liability; hence, the question of demand of Service Tax does not arise at all for the period after April 2007. He also relied upon the decisions in the cases of : (i) M/s. Sky Gourmet Pvt. Ltd. v. Commr. of Service Tax, Bangalore [2009 (14) S.T.R. 777 (Tri. Bang.)]; (ii) M/s. Daspalla Hotels Ltd. v. Commr. of C.Ex., Visakhapatnam [2010 (18) S.T.R. 75 (Tri. Bang.)]; (iii) M/s. LSG Sky Chefs (India) Pvt. Ltd. v. Commr. of S.T., Bangalore [2010 (18) S.T.R. 37 (Tri. Bang.)]; approved by the Hon ble Karnataka High Court in 2012 (27) S.T.R. 5 (Kar.); and (iv) Commr. of S.T., Bangalore v. M/s. The Grand Ashok [2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot sustain. Further, that the issue as to whether the appellant ought to have entered into a single contract and discharged Service Tax after availing the abatement in terms of Notification No. 01/2006-S.T. or as to whether the payment of Service Tax by entering into two separate contracts, for supply of food and for serving of food, is legally correct or not, is wholly an interpretational one. 4.6 He prayed that the appeal may be allowed. 5.1 Ms. K. Komathi, Learned Authorized Representative appeared on behalf of the respondent. She supported the findings in the impugned order. She adverted to the discussions in paragraph 6.0 of the order wherein the agreement entered with M/s. MPL dated 05.06.2006 is reproduced. The stipulations in the agreement show that the appellant has to not only deliver the food items in the premises, but also has to undertake the activity of serving the food. Further, that the word used in the agreement to refer to the appellant is caterer . That this would sufficiently imply that the appellant has been providing Outdoor Catering Services. 5.2 She argued that the appellant has bifurcated the activity of Outdoor Catering Services into two separa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id agreement read as under: g] The caterer shall engage adequate number of daily workers and supervisors to render prompt and courtesy service during all the shifts. The total number of persons to be engaged daily should not be less than 54 (including 3 supervisors and excluding the Manager) and deployment of person to cater to various serving timings will be in accordance with Annexure-C. Persons engaged by the caterer to do jobs in canteen should be free from suffering infectious diseases or protracted sickness and should subject themselves to medical check up periodically as may be required by the company. h] The time of serving is essential and the caterer at the notified timings, without any delay shall serve meals, tiffin and snacks/coffee/tea. 9.2 The above clauses would show that the appellant was engaged for providing the activity of serving the food as well. It is the case of the appellant that even though the agreement contained such clauses, they were only supplying the food and the activity of serving the food was undertaken by another contractor namely, M/s. Shanmugasundaram. 10. The agreement entered by M/s. Shanmugasundaram, which is a sole proprie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of cooked food to the employees at the counters would not be taxable under Outdoor Catering Services. The relevant part of the order reads as under: 3. On examination of the case records, we find that the respondent had installed point of sales machines/Bradma machines at the counters from where the cooked food is sold to the employees of the corporate house and that for selling the food items, the respondent had paid appropriate VAT amount levied under the local State Act. It also transpires that the respondent had not separately claimed any charges either from the corporate or from their employees towards provision of any service. Thus, analyzing the factual matrix of the case and also the statutory provisions, the Learned Adjudicating Authority has recorded specific finding that service tax is not payable on the foods sold by the respondent to its consumers directly. On going through the averments made by Revenue in the appeal memorandum, we do not find any justifiable reason or ground to accept the submissions that service tax liability should be fastened on the respondent for providing the taxable service of outdoor catering service. 4. In view of above, we do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made. It is very clear from the Article 366(29A)(f) that a tax on the supply of goods being food or any article for human consumption where such supply of service, is for cash, deferred payment and other valuable services and that supply of any goods shall be deemed to be a sale. We also noted that the decision of the Hon ble Supreme Court in the case of BSNL v. Union of India (supra). It is very clear that Article 366(29A) specifically provides a legal fiction in respect of catering contracts where the contracts can be divisible into two components, i.e. service portion and sale of goods portion. As far as the sale of goods portion is concerned, it is very clear that VAT or sale tax has already been discharged by the appellants. Once the sale tax has already been discharged by them, they cannot be asked to pay service tax on the same value. This is very clear from several decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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