TMI Blog2023 (2) TMI 783X X X X Extracts X X X X X X X X Extracts X X X X ..... estaurant and no other element of service is offered. The said transaction would, therefore, not be leviable to service tax, being in the nature of sale only. The Madras High Court in ANJAPPAR CHETTINAD A/C RESTAURANT, M/S RSM FOODS (P) LTD, M/S. THALAPAKATTI HOTELS PVT. LTD, M/S PRASANAM FOODS (P) LTD. VERSUS JOINT COMMISSIONER, THE COMMISSIONER OF GST AND CENTRAL EXCISE, THE ADDITIONAL COMMISIONER OF GST AND CENTRAL EXCISE [ 2021 (6) TMI 226 - MADRAS HIGH COURT] , after examining the aforesaid Circular dated 28.02.2011 and the clarification letter dated 13.08.2015, also held that in take-away of food items service tax would not be leviable as it would be a case of sale. In the present case, when the department has accepted the decision of the Commissioner (Appeals) that no service tax is leviable on take-away food items, it is not open to the department to take a contrary stand in this appeal - it has to be held that no service tax can be levied on the activity of take-away of food items as it would amount to sale and would not involve any element of service. Levy of service tax - consideration received under the category of renting of immovable property - privity of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x on the activity of takeaway of food items as well as on the share of rent received from the associated enterprise. Accordingly, a show cause notice dated 28.09.2020 proposing service tax demand of Rs. 23,09,45,317/- with interest and penalties was issued to the appellant with the following allegations: (a) The appellant was providing services in respect of takeaway orders by way of preparing and packaging food items for the convenience of customers; (b) The customers availed services of the chef by placing customized orders and it was not the case where the appellant was merely purchasing and selling food; (c) The invoices raised by the appellant involved an inseparable service component charged from the customers; (d) The value of goods was same in respect of dine-in or take-away orders; (e) The Central Board of Indirect Taxes and Customs had also clarified, by way of a publication in leading newspapers, that take-away food would also suffer service tax at the same rate as dine-in; (f) Restaurant services were taxable in terms of section 66E(i) of the Finance Act which provided that the service portion of an activity involving supply of food or drin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of service and the mode of sale, that is, by way of take away, has no bearing in the matter. As far as case laws which have been relied upon by the noticee, ratio of said decisions are not applicable to the present case. xxxxxxxxxx 24. I find that the notice has relied on the Judgment of Madras High Court in the case of Anjappar Chettinad A/C Restaurant, M/s RSM Foods (P) Limited, M/s Thalapakati Hotels Private Limited, M/s Prasanam Foods (P) Limited vs. Joint Commissioner, the Commissioner of GST and Central Excise, 2021 (6) TMI 226. In this regard I find that ratio of judgment is not applicable in the present case as the issue involved in the present case is service portion involved in the take away. xxxxxxxxxx 35. From the SCN as well as the written submissions of the Noticee, I find it an admitted fact on record that the noticee have taken a premises on rent from DIAL and they have an agreement with DIAL for the said purpose. It is also not disputed that one-third portion of cost of the said premise is shared by M/s Haldiram Snacks Pvt. Ltd., with the notice . Further, the notice themselves admitted that the products manufactured by M/s Haldiram Snacks Ltd. are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0779 of 2013 decided on 10.01.2018 (CESTAT-Allahabad)] iii. Reliance has also been placed on a Circular dated 24.09.1997, which clarifies that delivery of food, where there is no dining service extended, would not be subject to service tax and to the Circular dated 10.09.2004, which clarifies that free home delivery of food by hotels and restaurants would not be subject to service tax; iv. Reliance has also been placed on the Circular dated 28.02.2011, issued at the time of introduction of restaurant services in 2011, which clarifies that pick-up or delivery of foods or goods sold at MRP would tantamount to mere sale and would be outside the purview of service tax; v. Reference has also been made to the clarification issued to a restaurant by the Deputy Commissioner, Central Excise Service Tax Division, Chandigarh by letter dated 13.08.2015; vi. Payment of VAT and service tax is mutually exclusive; vii . In any case, value of pre-packaged goods should not be included in the taxable value and accordingly, demand has been computed incorrectly; viii . Assuming that the activity of take-away involves service portion, still service tax cannot be levied in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n restaurants having air-conditioning facility would be subject to service tax. In the present case, the appellant is providing restaurant services whereby food and other articles for human consumption and drinks are supplied by take-away services. The activities performed by the appellant are also preparations and supply of food items, for which the services chefs are required. Thus, the consideration charged by the appellant for the take-away food items involves the value of goods and material used by the appellant for the preparation of food items as also the service portion of the preparation, packing and delivery of food and would fall under restaurant services . 9. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 10. The period involved in this appeal is from April 2014 to June 2017 and the issue involved is regarding levy of service tax on the activity of take-away of food as well as on the rent shared by the associated enterprise. 11. The contention of appellant is that it sells the take-away food items over the counter whereas in dining services provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted in the margin charged over the direct costs. It is thus not uncommon to notice even packaged products being sold at prices far in excess of the MRP. xxxxxxxxxxx 1.4 The new levy is directed at services provided by high-end restaurants that are airconditioned and have license to serve liquor. Such restaurants provide conditions and ambience in a manner that service provided may assume predominance over the food in many situations . It should not be confused with mere sale of food at any eating house, where such services are materially absent or so minimal that it will be difficult to establish that any service in any meaningful way is being provided. xxxxxxxxxx 1.6 The levy is intended to be confined to the value of services contained in the composite contract and shall not cover either the meal portion in the composite contract or mere sale of food by way of pick-up or home delivery, as also goods sold at MRP. Finance Minister has announced in his budget speech 70% abatement on this service, which is, inter-alia, meant to separate such portion of the bill as relates to the deemed sale of meals and beverages. The relevant notification will be issued when the levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability for sale of food at the take-away counter or by parcel. They would state that the sale of packaged food constitutes pure trading activity and there is no component of service involved therein. They rely on the definition of service under Section 65B(44), which excludes the transfer of title in goods by way of sale. In the light of this exclusion, parcel sales or take away food would stand outside the ambit of service tax. 6. According to them, in parcel sales, there could be no artificial splitting of transactions between one of service and one of sale with the attempt to bring the same under the purview of the former. The petitioners rely on letter bearing No.DOF 334/3/2011-TRU dated 28.02.2011 which had, according to them, clarified that service tax is not intended to cover sale of food that is collected or picked up for consumption elsewhere. ***** 26. Thus, not all services rendered by restaurants in the sale of food and drink are taxable and it is only certain specified situations that attract tax. The sale of food and drink simplicitor, services of selection and purchase of ingredients, preparation of ingredients for cooking and the actual preparat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in case of take-away of food, the appellant sells the food/packaged items, as chosen by the customer, over the counter and this would amount to sale of goods. Services such as dining facility, washing area, clearing of the tables after the food has been eaten are, therefore, not involved. The activities of preparation of food and packing thereof by the appellant in case of take-away items are conditions of sale of such food, wherein the intention of the customer is to merely buy such packaged product from the appellant, and not to avail any restaurant services. 20. Learned counsel also pointed out that this issue was also examined by the Commissioner (Appeals) in Appeal No. 147/2019-ST decided on 25.03.2019 in the matter of Anjappar Chettinad, which order was accepted by the department on 17.06.2019. It would, therefore, be useful to reproduce the relevant portions of the order passed by the Commissioner (Appeals) and they are as follows: 09. The appellant has argued that in the case of takeaway/parcel/home delivery, no services are involved unlike in the restaurant, where the consumers enjoy a number of services namely the ambience, the waiter's services, the tables ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (Appeals) that no service tax is leviable on take-away food items, it is not open to the department to take a contrary stand in this appeal. 22. In view of the aforesaid discussion, it has to be held that no service tax can be levied on the activity of take-away of food items as it would amount to sale and would not involve any element of service. 23. The next issue is that required to be considered is as to whether permitting an associated enterprise to use a part of the premises for the sale of the product would amount to sub-letting and, therefore, the consideration received would be leviable to service tax under the category of renting of immovable property . 24. It needs to be noted that the appellant had entered into a rental agreement with DIAL for leasing out premises at the airport, for which it paid a rental amount to DIAL. It also transpires that from the property leased out to the appellant, the appellant sells its own goods as well as goods of the associated enterprise purchased by the appellant. The appellant claims that as the goods of the associated enterprise are also being sold from the same premises, it receives certain portion of the rent from the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
