2020 (4) TMI 834 - HC - Central Excise

Permission for withdrawal of appeal - Compounding of duty under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT - The present appeal is dismissed as withdrawn - Application allowed.

Summary

Issues:
1. Appeal seeking withdrawal
2. Interpretation of Notification No. 12/03-ST
3. Classification of supplies as sale
4. Application of pre-dominant nature test
5. Evidence of sale of food and beverages
6. Charging service tax on gross amount
7. Validity of judgment in Sky Gourmet Pvt Ltd case
8. Compliance with precedents
9. Upholding demand of interest
10. Imposition of penalty under Section 76

1. Appeal seeking withdrawal:
The appellant sought withdrawal of the appeal under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, for compounding the imposed duty. The respondent acknowledged this and stated that the appellant's approach to the competent authority under the scheme would be considered and decided in accordance with the law. The court allowed the application for withdrawal, dismissing the appeal with liberty for the appellant to file for compounding tax imposed under the scheme.

2. Interpretation of Notification No. 12/03-ST:
The appeal raised questions regarding the correctness of the order passed by the Customs, Excise & Service Tax Appellate Tribunal at New Delhi and the entitlement of the appellant to claim exemption under Notification No. 12/03-ST. The Tribunal held that even if the appellant satisfied the conditions of the notification, they were not entitled to the exemption. The issue revolved around the interpretation of the notification's conditions and their applicability to the appellant's case.

3. Classification of supplies as sale:
The Tribunal held that a Mandap Keeper, with separate invoices for food and services, could not claim exemption under Notification No. 12/03-ST as the supplies of food and beverage were not considered sales within the meaning of relevant legal provisions. The question of whether the supplies constituted a sale simplicitor or a deemed sale was a key point of contention in determining the applicability of the exemption.

4. Application of pre-dominant nature test:
The Tribunal applied the pre-dominant nature test to determine whether the transaction involved a composite of sale and service or predominantly a service. The appellant argued that the transaction was a composite one, while the department contended it was primarily a service. The court examined the application of this test in light of the specific facts and legal provisions.

5. Evidence of sale of food and beverages:
The Tribunal found that the appellant had not provided sufficient evidence to establish the sale of food and beverages in a manner that involved the transfer of possession for a price. This lack of evidence impacted the determination of whether the supplies could be classified as sales for the purposes of taxation.

6. Charging service tax on gross amount:
The Tribunal held that in the case of the appellant, service tax could be charged on the gross amount, including the value of goods, despite the principle of mutual exclusivity of service tax and sales tax. This decision raised questions about the proper application of tax laws in cases involving mixed supplies of goods and services.

7. Validity of judgment in Sky Gourmet Pvt Ltd case:
The Tribunal's decision regarding the judgment in the Sky Gourmet Pvt Ltd case was challenged, with the appellant questioning its correctness. The court had to assess the relevance and applicability of the precedent set by this judgment in the context of the present case.

8. Compliance with precedents:
The appellant argued that the Tribunal had ignored binding precedents, specifically referring to the judgment in the Sky Gourmet Pvt Ltd case and another case involving Daspalla Hotels Ltd. The issue of adherence to established legal precedents and the impact on the decision-making process was a crucial aspect of the appeal.

9. Upholding demand of interest:
The Tribunal had upheld the demand of interest from the appellant, which was contested in the appeal. The court needed to review the legal basis and justification for imposing interest on the appellant in the given circumstances.

10. Imposition of penalty under Section 76:
The Tribunal had imposed a penalty under Section 76 on the appellant, which was challenged in the appeal. The court had to assess whether the imposition of the penalty was justified and in compliance with the relevant legal provisions.