2015 (3) TMI 1011 - AT - Service Tax

Waiver of pre deposit - Outdoor Catering Service - supply of coffee and tea in their customer s premises - whether in the nature of service - appellant has paid VAT on the same - Held that - it is clearly evident that the service of supply of coffee to the employees of the Company at their premises is predominant element. - In the case Sayaji Hotels Ltd. (2011 (1) TMI 650 - CESTAT, NEW DELHI ) the issue was decided in favour of Revenue and has considered the Hon ble Delhi High Court s decision 2010 (7) TMI 174 - HIGH COURT OF DELHI - applicant failed to make out a prima facie case for waiver of pre-deposit of the entire dues - Partial stay granted.

Summary

Issues:
Demand of service tax on the supply of coffee and tea in customers' premises.

Analysis:
The applicant, engaged in the business of coffee and tea vending machines, stopped paying service tax in 2008, believing it did not fall under service tax. Show cause notices were issued proposing a demand of service tax for the period of Apr. '09 to Mar. '11. The adjudicating authority confirmed a demand of Rs. 1,33,31,737/- along with interest and penalty under Outdoor Catering Service.

The applicant argued that service tax cannot be demanded on selling coffee to clients as they are not providing any service, emphasizing that they pay VAT on the sale. They cited relevant circulars and legal precedents to support their position. On the contrary, the Revenue contended that the applicant was providing catering services as per the agreement, highlighting the supply of coffee and services to clients. They referenced tribunal decisions to strengthen their argument.

Upon reviewing the provisions of the Finance Act, 1994, it was found that the applicant entered into a contract to provide catering services and supply coffee and tea to clients' premises. The agreement specified the responsibilities of the applicant, including supplying approved quality tea/coffee, maintenance of vending machines, and appointing a pantry boy. The Tribunal observed that the service of supplying coffee to the employees was the predominant element, not just a sale. Considering the agreement as a whole, the Tribunal concluded that the service element was weightier, supporting the Revenue's stance.

The Tribunal ruled that the applicant failed to establish a prima facie case for waiving the pre-deposit of the entire dues. They directed the applicant to deposit Rs. 30 lakhs within eight weeks, after which the pre-deposit of the remaining amount would be waived, and recovery stayed until the appeal's disposal. Compliance was to be reported by a specified date.