2024 (11) TMI 721 - AT - Service Tax

Service tax on the foods sold on counter/taken away - Adjudicating Authority held that sale of food over the counter is not service and, therefore, there is no ground to levy service tax on the same - HELD THAT - As decided in M/s Bikanervala Foods Pvt. Ltd. 2024 (6) TMI 504 - CESTAT NEW DELHI give rise to the issue of taxability of sale of food items through Take Away or Home Delivery , the activity is clearly of sale of food and does not involve any service element and, therefore, following the ratio of the judgements referred above, the activity of sale of food items by Take Away or Home Delivery by the appellant is not liable to service tax. Accordingly, the impugned order deserves to be set aside and the appeal is allowed.

Issues:
1. Whether the sale of food over the counter is liable for service tax.
2. Interpretation of the definition of "service" under Section 65B(44) of the Finance Act, 1994.
3. Taxability of take-away or home deliveries of food items.
4. Applicability of service tax on the activity of "Take Away" and "Home Delivery" of food items.

Detailed Analysis:
1. The appeal was filed by the Revenue challenging the Order-In-Appeal passed by the Commissioner (Appeals) Customs, CGST & Central Excise, Lucknow, which held that the sale of food over the counter is not a service and, therefore, not liable for service tax. The Appellate Tribunal noted that the department's contention lacked a sustainable legal basis. The Tribunal referred to various departmental clarifications and held that over-the-counter sale of food does not attract service tax, as confirmed by previous decisions and circulars. The appeal was dismissed, emphasizing that take-away sales fall under "sale of goods" and are non-taxable in terms of service tax.

2. The Tribunal analyzed the definition of "service" under Section 65B(44) of the Finance Act, 1994, which includes any activity carried out by a person for another for consideration. The Tribunal emphasized that take-away sales are considered as pure sales, not services, as they involve the sale of goods without any service element. The Tribunal highlighted that the ultimate cost of food items in dine-in or take-away scenarios remains almost the same, indicating that take-away sales are generally considered as pure sales across the country.

3. The Tribunal referred to a previous decision involving Haldiram Marketing Pvt. Ltd., where it was established that the transaction involving "Pick-up" or "Home Delivery" of food items sold by restaurants is not liable for service tax, as it is considered a sale only without any service element. The Tribunal cited relevant circulars and clarifications to support the non-taxability of take-away or home deliveries of food items. It was concluded that the provision of food and drink for take-away does not attract service tax under the Act, as it involves the sale of goods without the services normally offered at a restaurant.

4. The Tribunal further referenced the decision in the case of Haldiram Marketing Pvt. Ltd., where it was held that the activity of "Take Away" and "Home Delivery" of food items does not amount to a taxable service under the category of Restaurant Service. The Tribunal reiterated that the activity of selling food items through take-away or home delivery is not liable for service tax, as it constitutes a sale of goods without any service element. The Tribunal upheld the impugned order, dismissing the appeal filed by the Revenue and disposing of the cross-objection filed by the Respondent-Assessee.

Overall, the Tribunal's decision was based on the interpretation of relevant legal provisions, departmental clarifications, and previous judgments, establishing that the sale of food over the counter, take-away, or home deliveries do not attract service tax as they are considered sales of goods without a significant service component.

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