2014 (3) TMI 230 - AT - Service Tax

Waiver of pre deposit - Demand of service tax - Penalty u/s 78 - Service of providing meals to school students under the Mid-day Meal Scheme - Whether service amounts to Outdoor Catering Services - Held that - Considering a small amount of consideration received by the appellant towards the labour involved in supplying the mid-day meal, especially, when the transaction is mainly one of sale, the appellant has made out a prima facie case for grant of stay. Accordingly, we grant unconditional waiver from pre-deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal - Stay granted.

Summary

Issues involved:
Service Tax demand confirmation, Interest imposition, Penalty under Section 78, Appeal against Order-in-Appeal, Classification of activity as 'Outdoor Catering Services', Prima facie case for grant of stay.

Analysis:
The judgment pertains to an appeal and stay application against the Order-in-Appeal confirming a Service Tax demand of Rs.67,205 against the appellant, M/s. Suruchi Caterers, Pune, for the period January 2011 to March 2011, along with interest and penalty under Section 78 of the Finance Act, 1994. The lower appellate authority upheld the Service Tax demand but set aside the penalty. The appellant contended that providing meals to school students under the Mid-day Meal Scheme does not constitute 'Outdoor Catering Services'. Citing a Delhi High Court decision, the appellant argued that the service element in supplying food is negligible, primarily constituting a sale of food. The appellant requested a stay on recovery pending appeal.

The learned Counsel for the appellant argued that the cost of materials per meal per student, along with expenses for fuel and labor, justified the contention that the activity did not fall under 'Outdoor Catering Services'. The appellant relied on a previous court decision to support the argument that the service element in supplying food is minimal, emphasizing the sale aspect. On the other hand, the Revenue's representative reiterated the lower authority's findings without providing additional arguments.

The Tribunal considered the minimal amount received by the appellant for labor involved in supplying mid-day meals, highlighting the transaction's predominant nature as a sale. Acknowledging the appellant's prima facie case for the grant of stay, the Tribunal granted an unconditional waiver from pre-deposit of the adjudged dues and stayed the recovery during the appeal's pendency. The judgment was dictated and pronounced in court by the Tribunal.