2015 (12) TMI 751 - AT - Service Tax

Demand of service tax - pure agent - outdoor catering - whether the activity undertaken by the appellant falls under outdoor catering service for M/s. Zuari Cement Ltd or not - Held that - Appellant had entered into an agreement with M/s. Zuari Cement Ltd. According to the agreement, the appellant was to provide catering services and for this purpose agreement provided for appointment of Cook and Asst. Cook and helpers, etc. for which the appellant was paid the wages of the staff and a margin against the wages and also a lump sum amount. This would show that the agreement is for providing catering services in the factory premises of M/s. Zuari Cement Ltd. and the claim of the appellant that appellant was not acting as an outdoor catering cannot be accepted. According to Clause 76(a) of Section 65 of the Finance Act, 1994 outdoor caterer means a caterer engaged in providing services in connection with catering at a place. Therefore the classification adopted by the Revenue is correct. The contract between the two parties does not provide that appellant will act as a pure agent. In fact, there is clear finding of the lower authorities that appellant received not only the wages but additional margin for the wages and further a lump sum amount for acting as a contractor have been made. In such circumstances, we cannot say that appellant has acted as a pure agent. SSI Exemption is not available to assessee - Since appellant did not follow any procedure and did not file the returns, we cannot say that extended period could not have been invoked. - However, benefit of 25% penalty is given - decided partly in favour of assessee.

Issues:
1. Determination of whether the activity undertaken by the appellant constitutes outdoor catering service for M/s. Zuari Cement Ltd.
2. Evaluation of the appellant's claim of acting as a pure agent.
3. Assessment of the appellant's eligibility for SSI exemption.
4. Examination of the correctness of invoking the extended period for confirming the demand.

Analysis:

1. Outdoor Catering Service Classification:
The main issue in the appeals revolved around whether the appellant's activity for M/s. Zuari Cement Ltd could be categorized as outdoor catering service. The agreement between the parties indicated that the appellant was engaged to provide catering services within the factory premises, leading to the conclusion that the appellant's claim of not being an outdoor caterer was unfounded. The Revenue's classification as an outdoor caterer was deemed correct under Clause 76(a) of Section 65 of the Finance Act, 1994.

2. Pure Agent Claim Evaluation:
Regarding the appellant's assertion of being a "pure agent," it was argued that tokens issued by the management were collected by the appellant to provide food items, suggesting a pure agency relationship. However, the absence of a contractual agreement explicitly designating the appellant as a pure agent, coupled with the appellant receiving wages, additional margin, and a lump sum amount, led to the rejection of the claim that the appellant acted as a pure agent.

3. SSI Exemption Eligibility:
The Commissioner (A) had meticulously analyzed the appellant's eligibility for Small Scale Industry (SSI) exemption, incorporating a year-wise table in the impugned order. The conclusion drawn was that the appellant did not qualify for SSI exemption, a finding upheld by the Tribunal.

4. Correctness of Extended Period Invocation:
Considering the agreement's provision for additional service tax and the appellant's non-compliance with return filing procedures, the Tribunal justified the invocation of the extended period for confirming the demand. Consequently, the Tribunal upheld the demand for service tax.

In the final decision, the Tribunal upheld the service tax demand while granting the appellant an opportunity to pay the entire amount of service tax, interest, and a 25% penalty within 30 days to avoid the remaining 75% penalty. The appeals were disposed of accordingly.

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