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2024 (8) TMI 1507 - AT - Service TaxBenefit of Notification No. 25/2012-ST in respect of services of food and beverages by a canteen maintained in a factory - denial only on the ground that said exemption is available to the factory and not to the outside contractor who runs the canteen - HELD THAT - From the plain reading of the above notification, it is nowhere indicated that which person will get the exemption. It is predominantly the service of Food and Beverages by a canteen is exempted irrespective of the fact that who is running the canteen. The only condition is that such canteen should be operated within the premises of the factory as per Factory s Act, 1948 which is not in dispute. Therefore, the exemption of Notification No. 25/2012-ST is clearly admissible to the appellant. As it is the appellant who run the canteen in the factory which is covered by Factory s Act, 1994. This issue is no longer res-integra as the same has been decided by this Tribunal in the case of M/S ICS FOOD PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, NOIDA 2018 (7) TMI 1061 - CESTAT ALLAHABAD where it was held that ' the services provided by the appellant is covered by Entry No. 19A of the Negative List and exempted from payment of Service Tax.' Conclusion - The exemption under Notification No. 25/2012-ST applies to the service of providing food and beverages within a factory canteen, regardless of whether the service is provided by the factory owner or an external contractor. Appeal allowed. 1. ISSUES PRESENTED and CONSIDERED The primary legal issue in this case is whether the benefit of Notification No. 25/2012-ST, which exempts certain services from service tax, is available to an appellant providing food and beverage services through a canteen maintained in a factory. Specifically, the question is whether the exemption applies only to the owner of the premises where the canteen is operated or also to an outside contractor running the canteen. 2. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The exemption under Notification No. 25/2012-ST is granted for services related to serving food or beverages by a restaurant, eating joint, or mess, excluding those with air-conditioning or a license to serve alcoholic beverages. The relevant legal framework includes the Finance Act, 1994, and the Factories Act, 1948, which necessitates the operation of a canteen within factory premises. Court's Interpretation and Reasoning The court interpreted the notification to mean that the exemption applies to the service of food and beverages by a canteen, irrespective of who operates it. The court emphasized that the notification does not specify that the exemption is limited to the factory owner, thus allowing outside contractors to avail of the exemption as long as the canteen operates within factory premises. Key Evidence and Findings The court relied on the precedent set by the CESTAT bench of Allahabad in the case of M/s. ICS Food Pvt. Limited vs. Commissioner of Service Tax, Noida, which was upheld by the Supreme Court. This precedent established that the exemption under Notification No. 25/2012-ST applied to services provided by an outside contractor in a factory canteen. Application of Law to Facts The court applied the legal framework to the facts by determining that the appellant, as an outside contractor operating a canteen within a factory, was entitled to the exemption. The court found that the appellant's services fell under the scope of the notification, as they provided food and beverages within the factory premises, meeting the conditions stipulated by the Factories Act, 1948. Treatment of Competing Arguments The Revenue argued that the exemption should only apply to canteens run by the factory itself. However, the court dismissed this argument, emphasizing that the notification's language did not support such a restrictive interpretation. The court noted that the exemption applies to the service itself, not the identity of the service provider. Conclusions The court concluded that the appellant was entitled to the exemption under Notification No. 25/2012-ST. Consequently, the demand for service tax was deemed unsustainable, leading to the setting aside of the impugned order and the allowance of the appeal. 3. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning "From the plain reading of the above notification, it is nowhere indicated that which person will get the exemption. It is predominantly the service of Food and Beverages by a canteen is exempted irrespective of the fact that who is running the canteen." Core Principles Established The judgment established the principle that the exemption under Notification No. 25/2012-ST applies to the service of providing food and beverages within a factory canteen, regardless of whether the service is provided by the factory owner or an external contractor. Final Determinations on Each Issue The court determined that the appellant, as an external contractor operating a canteen within a factory, is entitled to the exemption under Notification No. 25/2012-ST. The demand for service tax was not sustainable, and the appeal was allowed, setting aside the impugned order.
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