2014 (12) TMI 1038 - AT - Service Tax

Mid-day Meal Scheme - Exemption order No. 2/2/2011-Service Tax, dated 8-8-2011 - Outdoor catering services - Held that - By an ad hoc exemption order No. 2/2/2011-Service Tax, dated 8-8-2011, the Central Govt. in purported exercise of powers under Section 93(2) of the Act granted exemption from the liability to tax in respect of outdoor catering service provided by a NGO registered under any Central Govt. Act or State Act, or centrally assisted Mid-day Meal Scheme, during the period 10-9-2004 to 2-10-2010. That the assessee fulfils the requirements for entitlement to the exemption under the Notification dated 8-8-2011, is not contested by Revenue. - impugned adjudication orders are set aside - Decided in favour of assessee.

Summary

Issues:
1. Service Tax liability on outdoor catering services provided by an NGO.
2. Applicability of exemption under Notification dated 8-8-2011 for outdoor catering services provided by a registered NGO.
3. Adjudication of tax liability and penalties.

Analysis:

Issue 1: Service Tax liability on outdoor catering services provided by an NGO
The appeals were filed by the assessee challenging adjudication orders imposing Service Tax for providing catering services from a centralised kitchen to schools. The services were considered taxable under Section 65(76A) read with 65(105)(zzt) of the Finance Act, 1994. The assessee, an NGO, argued that as they operated on a no-profit no-loss basis, they did not have a commercial intention in providing the services. However, the contention was rejected by the adjudicating authority.

Issue 2: Applicability of exemption under Notification dated 8-8-2011
An ad hoc exemption order (No. 2/2/2011-Service Tax) issued by the Central Government granted exemption from tax liability for outdoor catering services provided by NGOs registered under any Central or State Act, or centrally assisted Mid-day Meal Scheme, during a specified period. It was acknowledged that the assessee met the requirements for exemption under the said Notification, and this fact was not disputed by the Revenue.

Issue 3: Adjudication of tax liability and penalties
Considering the circumstances and the availability of exemption under the Notification dated 8-8-2011, the Tribunal set aside the impugned adjudication orders and allowed the appeals. The decision was made without imposing any costs on the parties. This indicates that the Tribunal recognized the applicability of the exemption and ruled in favor of the assessee, thereby relieving them from the tax liability and penalties imposed in the initial orders.

In conclusion, the Tribunal's judgment highlighted the importance of considering specific exemptions granted by the government in determining tax liabilities, especially in cases involving NGOs providing services for social welfare purposes. The ruling ultimately favored the assessee by acknowledging their eligibility for the exemption and overturning the earlier adjudication orders.