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2024 (1) TMI 521 - AT - Service TaxNature of transaction - sale or service - whether the Appellant has correctly discharged full Service Tax on Hall Hire Charges, when full VAT stood paid on food sale component? - extended period of limitation - HELD THAT - In the matter of M/S CHOKHI DHANI VERSUS THE PRINCIPAL COMMISSIONER CENTRAL EXCISE SERVICE TAX 2020 (1) TMI 675 - CESTAT NEW DELHI , Tribunal has held that banquet and supply of food and beverages having been shown separately by different charges as banquet hall charges and similarly for food charges separately in relation to Mandap Keeper services is permissible and does not disentitle benefit of Notification No. 12/2003ST dated 28th June, 2003. It is also found that not only the supply of food has been segregated but also appellants have discharged VAT tax on such food component and have also paid service Tax on Mandap keeper charges extracted from the parties and paid service tax on it. The constraint of separate contract emphasized in impugned order remains of no legal consequence, when supplier of service and service receiver indicate through invoice by implication that separation of both elements was agreed upon and accepted by both parties to the contract - extended period cannot be invoked against the appellant, even if some contrary decisions existed too, as matter involves interpretation of law. The impugned order set aside - appeal allowed.
Issues Involved:
1. Taxability of services provided by the assessee, specifically Mandap Keeper services and catering services. 2. Applicability of exemption notifications and abatement provisions. 3. Liability for service tax on various other services and under reverse charge mechanism. 4. Allegations of suppression of facts and invocation of the extended period for recovery. 5. Validity of the demand and penalties imposed. Summary of Judgment: 1. Taxability of Services: The assessee, engaged in running a hotel and providing various services including Mandap Keeper services, split invoices into charges for Mandap and food & beverages. The department observed that the assessee did not pay service tax on the catering services, claiming exemption under Notification No. 12/2003-ST. The department contended that the supply of food and beverages during Mandap Keeper services was not a "sale" and thus not exempt. 2. Exemption Notifications and Abatement: The adjudicating authority found that the assessee should have paid service tax on the entire value of Mandap Keeper services, including catering, under Notification No. 1/2006-ST and 26/2012-ST. The assessee's reliance on Notification No. 12/2003-ST was deemed incorrect as there was no sale of food and beverages involved. The authority held that the benefit of Notification No. 12/2003-ST was not applicable, and the value of catering services should be included in the taxable value of Mandap Keeper services. 3. Liability for Other Services and Reverse Charge: The auditors observed non-payment of service tax on Internet services, Business Auxiliary Services, GTA services, and Sponsorship services. Additionally, services received from overseas providers were liable to service tax under reverse charge, which the assessee had not paid. 4. Allegations of Suppression and Extended Period: The department alleged that the assessee willfully suppressed facts to evade service tax, justifying the invocation of the extended period for recovery under Section 73(1) of the Finance Act, 1994. The adjudicating authority upheld this view, leading to the issuance of a show-cause notice and demand for service tax, interest, and penalties. 5. Validity of Demand and Penalties: The tribunal considered various submissions and case laws, including the Supreme Court's judgment in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi, which held that serving food in a restaurant does not constitute a sale. The tribunal concluded that the catering component in Mandap Keeper services was not a sale and thus not exempt under Notification No. 12/2003-ST. The tribunal also distinguished the present case from other cited cases and upheld the demand for service tax on the entire value of Mandap Keeper services, including catering. Conclusion: The tribunal set aside the impugned order on the grounds of limitation, finding that the extended period for recovery could not be invoked due to the matter involving interpretation of law. The appeal was allowed with consequent relief, and the demand was deemed time-barred.
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