2012 (11) TMI 86 - AT - Service Tax

Benefit of abatement under Notification No. 12/03-ST - Mandap Keeper service - whether food and beverages supplied during such function conducted in the banquet halls, where separate bills/invoices were raised, is required to be treated as part of Mandap Keeper service , or the same would amount to separate transaction Held that - Supply of food and beverages is the sale transaction, chargeable to sales tax (VAT), inasmuch as the appellant has paid sales tax in respect of the same - food items have been supplied under separate invoices and have discharged the sale tax liability are required to be followed for extending the benefit of notification in question full stay granted.

Summary

Issues:
Interpretation of whether food and beverages supplied during functions at banquet halls are part of "Mandap Keeper service" or separate transactions.

Analysis:
The appellant, registered under the category of "Mandap Keeper service," disputes whether food and beverages supplied during functions at banquet halls should be considered part of the service or as separate transactions subject to sales tax. The appellant argues that since they have paid sales tax on the food and beverages, the value should not be included in the "Mandap Keeper service."

Upon review, the Tribunal referred to precedents such as the Daspalla Hotels case and the LSG Sky Chefs case, which held that if food and beverages are invoiced separately and sales tax is paid, they are excluded from service tax liability. The Tribunal also noted that service tax is not applicable on the supply of food if sales tax is levied on it. These decisions were confirmed by the Karnataka High Court.

The Tribunal also considered the Sayaji Hotels case, which concluded that the supply of food in service contracts does not involve a distinct sale of food, thus not eligible for abatement under the exemption notification. The Revenue argued that the appellant should deposit the demanded duty based on this decision.

In response, the appellant highlighted that the Sayaji Hotels case did not consider the Daspalla Hotels case and the favorable decisions from the Tribunal and the Karnataka High Court in the LSG Sky Chefs case. The appellant also mentioned that the High Court of Madhya Pradesh had stayed the Tribunal's order in the Sayaji Hotels case.

After evaluating the various decisions and the stay order by the High Court of Madhya Pradesh, the Tribunal found that the appellant had a strong prima facie case in their favor due to conflicting Tribunal orders and the stay on the Sayaji Hotels case. Consequently, the Tribunal allowed the stay petition unconditionally in favor of the appellant.