2012 (8) TMI 244 - AT - Service Tax

Catering services - Denial of exemption for small service providers as per Notification No. 6/05-ST - appellant submits that for the purpose of calculation, Revenue is taking into account the entire receipts of the appellants whereas the taxable value should be taken after allowing abatement of 50% in terms of Notification No. 1/-90ST Held that - There is provision in the Notification to the effect that value of services exempted by other Notification should not be taken into account for calculating the aggregate value under Notification No. 4/07-ST - argument that they were providing only tea and snacks and such items were not substantial and satisfying mean also to be misplaced because the canteen was operated for providing meals to employees of AIL and tea and snacks were only items served at times intervening between that for substantial meals and that was not the main service provided pre-deposit waived

Summary

Issues:
1. Eligibility for exemption for small service providers under Notification No. 6/05-ST.
2. Calculation of taxable value for catering services.
3. Interpretation of abatement provisions under Notification No. 1/06-ST.
4. Consideration of services exempted by other notifications in calculating aggregate value.
5. Determining the main service provided in a catering business.

Eligibility for Exemption for Small Service Providers:
The appellants, providing catering services, were challenged by the Revenue for not meeting the exemption criteria for small service providers under Notification No. 6/05-ST due to exceeding the value threshold of Rs. 8 lakhs. The Counsel argued that the taxable value should consider a 50% abatement as per Notification No. 1/-90ST, making their turnover fall below the exemption limit. The Assistant Commissioner initially ruled in favor of the appellants, but the Revenue appealed, leading to the Commissioner (Appeals) upholding the demand.

Calculation of Taxable Value for Catering Services:
The contention arose regarding whether the taxable value for catering services should include the entire receipts or only after allowing a 50% abatement as per Notification No. 1/06-ST. The Revenue insisted on considering the total value received by the appellants, arguing that the abatement applies only for substantial and satisfying meals, not for tea and snacks. The Tribunal examined the notification and found that services exempted by other notifications should not be factored in when calculating the aggregate value under Notification No. 4/07-ST.

Interpretation of Abatement Provisions:
The Tribunal analyzed the abatement provisions under Notification No. 1/06-ST, emphasizing that the abatement of 50% is applicable only for substantial and satisfying meals. It was noted that the appellants served tea and snacks in addition to meals, but these were not considered the main service provided by the catering business.

Consideration of Services Exempted by Other Notifications:
In determining the eligibility for exemption, the Tribunal highlighted that services exempted by other notifications should not be included in the calculation of the aggregate value under Notification No. 4/07-ST. This clarification played a crucial role in assessing the appellants' eligibility for the exemption as small service providers.

Determining the Main Service Provided in a Catering Business:
The Tribunal deliberated on the main service provided by the catering business, emphasizing that the canteen primarily operated to offer meals to employees, with tea and snacks serving as supplementary items. This distinction was pivotal in understanding the nature of services rendered by the appellants.

In conclusion, the Tribunal found a strong case in favor of the appellants, leading to the waiver of pre-deposit of dues and staying the collection of such dues during the appeal process.