2018 (7) TMI 858 - AT - Service Tax

Levy of service tax - recovering consideration from its employees for providing canteen services - scope of service - Held that - I am clearly not in a position to appreciate what has been stated therein. Commissioner (Appeals) states that appellant s act of recovering consideration from its employees for providing canteen services falls under the definition of the term - Service. Since it is the finding Commissioner (Appeals) that the activity undertaken by the appellant is a canteen service, then how can he deny the exemption that has been given in respect of the said taxable service. No cogent or even an iota of reason is coming for not allowing the benefit of exemption under notification No. 25/2012-ST dated 20.06.2012 as amended by the notification No. 14/2013-ST dated 22.10.2013 - service tax not levied, since the activity does not fall under the scope of term service . Appeal allowed - decided in favor of appellant.

Summary

Issues:
Levy of service tax on charges recovered by the appellant from workmen for providing canteen facilities.

Analysis:
The issue in this appeal pertains to the levy of service tax on charges collected by the appellant from his workmen for providing canteen facilities. The appellant outsourced catering services and received them from an outdoor caterer, who had already paid service tax on the catering facilities. The dispute revolves around whether the appellant should pay service tax again on the amounts collected from workmen. The appellant argued that this would result in double taxation, citing a Larger Bench decision and relevant notifications exempting such services. The Department contended that the appellant's act of recovering consideration for canteen services falls under the definition of 'service' and is taxable, as per Section 65B of the Act and Section 66E. The Commissioner (Appeals) upheld this view, emphasizing that the appellant's activity is not covered in the negative list or mega exemption and is therefore liable for service tax.

Regarding the exemption under Notification No. 14/2013-ST, the Commissioner (Appeals) rejected the claim, stating that the exemptions are in a different context and have no relevance to the present issue. However, the appellate authority found this reasoning unsatisfactory. The appellate authority questioned how the Commissioner (Appeals) could deny the exemption for canteen services when it was acknowledged that the appellant's activity fell under this category. The appellate authority found no valid reason for not allowing the benefit of exemption under the relevant notifications. Consequently, the appeal was allowed, granting the appellant consequential relief, if any.

In conclusion, the appellate tribunal ruled in favor of the appellant, emphasizing that the exemption for canteen services should apply in this case. The tribunal found the Commissioner (Appeals)'s reasoning regarding the denial of exemption to be unfounded, leading to the allowance of the appeal with any necessary relief.