2018 (4) TMI 724 - AT - Service Tax

Mandap Keeper Service - activity undertook undertook in their own party hall - value of service as well as the sale of food items shown separately in the invoices - appellant paid service tax on renting of immovable property services - Held that - the appellant had separately claimed the charges towards the hall rent and the catering services provided to its customers. The appellant had also reflected the value of service as well as the sale of food items separately in the invoices. Since the Department has not disputed the fact regarding payments of VAT on the supply of food, the benefit of Notification No. 12/2003 should be available to the appellant. VAT paid on sale of food should not be included in the value of service provided and billed separately. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appeal against order by Commissioner of Service Tax, New Delhi.
2. Applicability of Notification No. 12/2003 - ST for service tax.
3. Dispute over bifurcation of charges for party hall rent and catering services.
4. Benefit of exemption under Notification No. 12/2003.
5. Interpretation of VAT payment on food supply in relation to service tax.

Analysis:
1. The appeal was filed against the order passed by the Commissioner of Service Tax, New Delhi, confirming a service tax demand of ?43,24,811 along with interest and penalties. The appellant, engaged in providing party hall on rent and catering services, faced show cause proceedings due to changes in service tax category and cessation of paying tax on catering activities.

2. The appellant claimed entitlement to the benefit of Notification No. 12/2003 - ST for food sold during party hall rentals. The consultant argued that as a service provider, the appellant should not be liable to pay service tax on food supplied. The appellant's invoices separately listed hall rent and catering charges, reflecting VAT payments on food supply.

3. The Tribunal noted that the invoices clearly segregated charges for hall rent and catering services, with separate values for services and food items. As VAT payment on food supply was undisputed, the benefit of Notification No. 12/2003 - ST should apply. Precedents cited by the appellant's consultant supported the exclusion of VAT-paid food value from service tax calculations.

4. Citing previous Tribunal decisions, the judgment emphasized that VAT and service tax cannot be levied on the same value. The Tribunal upheld the view that VAT-paid food supply should not be included in the service value. The judgment referenced specific cases to support the exclusion of food and beverage costs from service tax calculations under Notification No. 12/2003 - ST.

5. Relying on legal principles and precedents, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal. The judgment highlighted the exclusivity of VAT and service tax, concluding that VAT-paid food supply should not be subject to additional service tax. The decision aligned with past rulings and legal interpretations regarding the taxation of composite contracts involving service and goods supply.

This detailed analysis of the judgment showcases the issues raised, arguments presented, and the Tribunal's decision based on legal principles and precedents.