2009 (8) TMI 445 - AT - Service Tax

Outdoor caterer services- Notification No. 12/03, dated 20-6-2003- The appellants are supplying food on board the flights of M/s. Air India. The impugned order passed by the adjudicating Commissioner demands service tax on the entire value received by the appellants from M/s. Air India. It has been argued on behalf of the appellants that part of the value relates to supply of food items on which they are paying VAT/Sales Tax. They have also claimed benefit of Notification No. 12/03, dated 20-6-2003. In the light of the various decisions held that- the present appellants are also entitled to the benefit of Notification No. 12/03. However, since the lower authority has not examined the details furnished by the appellants for the purpose of granting the benefit of Notification No. 12/03, we set aside the impugned order, and remand the matter to him for a fresh decision. The appeal is allowed by way of remand.

Summary

Issues:
1. Determination of service tax on the value received by the appellant from the service provided.
2. Applicability of Notification No. 12/03 regarding service tax on food items supplied by the appellant.

Analysis:
1. The issue in this case revolves around the determination of service tax on the value received by the appellant for providing outdoor catering services to an airline. The adjudicating Commissioner demanded service tax on the entire value received by the appellant from the airline. The appellant argued that part of the value pertained to the supply of food items on which they were already paying VAT/Sales Tax. The appellant claimed the benefit of Notification No. 12/03, dated 20-6-2003, to support their argument.

2. The appellant contended that the adjudicating Commissioner denied them the benefit of Notification No. 12/03. The appellant's advocate argued that the value of food items on which VAT/Sales Tax was paid should not be included in the chargeable value for service tax. The appellant also highlighted alleged discrimination by the department in granting benefits to other in-flight catering service providers. The appellant's argument was supported by citing previous Tribunal decisions where similar service providers were allowed the benefit of the notification.

3. After hearing arguments from both sides and examining relevant case records, the Tribunal found merit in the appellant's contentions. The Tribunal noted that previous decisions had held that when sales tax is leviable on the supply of food items, service tax cannot be imposed on the same value. The Tribunal observed that the Commissioner had not correctly assessed the applicability of Notification No. 12/03 and had not considered the cost of food items supplied by the appellant. Consequently, the Tribunal held that the appellant was entitled to the benefit of the notification and remanded the case for a fresh decision by the lower authority.

4. The Tribunal compared the appellant's situation to previous cases where similar service providers had been granted the benefit of Notification No. 12/03. Since the appellant was paying VAT/Sales Tax on the food items supplied, the Tribunal concluded that the appellant should also be entitled to the notification's benefits. The Tribunal set aside the impugned order and remanded the matter to the lower authority for a fresh decision, instructing a thorough examination of the details provided by the appellant and the determination of any differential tax payable after granting the notification's benefit.

5. In conclusion, the Tribunal allowed the appeal by way of remand, emphasizing the appellant's entitlement to the benefit of Notification No. 12/03 and the necessity for a fair and accurate assessment of the service tax liability on the supplied food items.