2008 (4) TMI 206 - AT - Service Tax

Preparation and supply of meals and snacks to various Air lines - appellant pays sales tax on the food items sold - appellants are raising separate invoices for goods sold and services provided - appellant is entitled to the benefit of Notification 12/2003-S.T. dated 20-6-2003 which provides for deduction of the value of the goods and materials sold no suppression larger period not invokable - waiver of pre-deposit of the entire tax demanded, interest and also the penalties granted

Issues:
1. Service Tax liability on supply of food and beverages to Airlines.
2. Applicability of Notification 12/2003-S.T. and its deduction provisions.
3. Treatment of miscellaneous expenses for abatement.
4. Benefit of cum tax treatment on the amount received from customers.
5. Invocation of extended period of limitation.
6. Waiver of penalties under Sections 76, 77, and 79 of the Act.
7. Interpretation of Notification No. 30/97-ST on abatement for out door caterers.

Analysis:
1. Service Tax Liability: The appellant, engaged in catering services, was under scrutiny for not paying Service Tax on the supply of meals/food items to Airlines. The appellant argued that they were covered under Article 366 (29-A) of the Constitution, which includes a tax on the supply of goods as part of any service. They contended that since they had already paid sales tax on the food items sold, no additional Service Tax was due, citing relevant case laws to support their position.

2. Notification 12/2003-S.T.: The appellant claimed the benefit of Notification 12/2003-S.T., which allows for the deduction of the value of goods and materials sold. They relied on previous decisions to support their entitlement to this deduction, emphasizing the separate invoicing for goods and services provided.

3. Miscellaneous Expenses Abatement: The appellant argued that miscellaneous expenses collected from Airlines were available for abatement, citing relevant trade notices and case laws to support their position for the deduction of certain expenses.

4. Cum Tax Treatment: The appellant sought the benefit of treating the amount received from customers, inclusive of Service Tax payable, known as cum tax treatment. They referenced various decisions and explanations under the Act to support their claim for this treatment.

5. Extended Period of Limitation: The appellant contested the invocation of the extended period of limitation, arguing that there was no fraud or willful misstatement to warrant such an extension. They relied on specific cases to support their stance against the extended period.

6. Penalty Waiver: The appellant argued for the waiver of penalties under Sections 76, 77, and 79 of the Act, citing statutory provisions that allow for penalty waiver if reasonable cause for failure is proven. They referenced relevant decisions to support their plea for penalty waiver.

7. Interpretation of Notification No. 30/97-ST: The respondent highlighted the CBEC's clarification on out door caterers and the abatement provision of 50% under Notification No. 30/97-ST. The appellant countered by emphasizing their compliance with the Notification and the availability of the actual cost of food and beverages to avoid double taxation.

In the final judgment, the Tribunal found in favor of the appellant, considering the arguments presented and the supporting case laws. The Tribunal ordered the waiver of the entire tax demanded, interest, and penalties, staying all recovery proceedings until the appeal's disposal. The decision was based on the absence of suppression of facts and the favorable interpretation of the law and notifications cited during the proceedings.

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