2016 (9) TMI 430 - AT - Service Tax

Service tax liability - outdoor catering services - engaged in providing Mid Day Meals to various schools and are getting paid for the same from the Schools/Government - appellant contended that the School/Govt. organization is not providing any infrastructure, necessary utensils, arrangement for water and sitting arrangements, they themselves are cooking and supplying which is outright sale to the Govt. and there is no service component. Held that - by applying the decision of Principal Bench of the Tribunal in the case of Ambedkar Institute of Hotel Management v. CCE Chandigarh 2015 (9) TMI 163 - CESTAT NEW DELHI where after analyzing the provisions to Section 65(76a) and 73 of the Finance Act, 1994, Tribunal came to a conclusion that the service tax liability does not arise on the appellant therein for preparing and supplying food under Mid Day Meal Scheme, the impugned orders are set aside. - Decided in favour of appellant

Summary

Issues:
Demand of service tax liability on the appellant for the period March 2006 to March 2011 under the category of "outdoor catering services."

Analysis:
The issue in these cases pertains to the demand of service tax liability on the appellant for providing Mid Day Meals to schools from March 2006 to March 2011 under the category of "outdoor catering services." The lower authorities concluded that the appellant was liable for service tax as they were providing meals to schools and receiving payment for the same. However, the appellant argued that they were not providing any service component as the schools/government did not provide infrastructure or necessary arrangements. The Tribunal referred to a previous case and held that the service tax liability did not arise for preparing and supplying food under the Mid Day Meal Scheme. The Tribunal noted that the appellant was simply preparing and supplying meals to the government as per the scheme, and since they were not involved in serving the meals at the schools, they did not fall under the definition of "outdoor caterer." Therefore, the duty demand on this count was deemed unsustainable, and the impugned orders were set aside, allowing the appeals.

This judgment highlights the importance of analyzing the specific activities and arrangements involved in providing services to determine the applicability of tax liability. It underscores the need to consider the nuances of the services provided and the relevant legal definitions to ascertain the tax implications accurately. The decision provides clarity on the scope of taxable services under the law and emphasizes the significance of factual circumstances in determining tax liability.