2013 (7) TMI 97 - AT - Service Tax

Outdoor catering Service - Section 65(76)(a) catering at a place other than his own - Section 65(105)(zzt) defines taxable service Held that - From the nature of the transaction it is clear that the service is provided by the appellant to the company and not to the employees - Service recipient is the person who pays for the services received and it is the company who is making the payment in the present case - The definition of outdoor catering also includes a person who provides such service at a place of the service recipient - the appellant does not cease to be an outdoor caterer , merely because the service has been provided at the premises provided by the service recipient the court rejected the argument of the appellant that the transaction is one of sales and the plea of financial hardship is without any merits. The appellant directed to make a pre-deposit of 50% of the service tax demand - stay granted partly.

Summary

Issues:
- Whether the appellant's services qualify as outdoor catering services for the purpose of service tax liability?
- Whether the appellant's financial difficulty justifies granting a stay?

Analysis:

Issue 1: Outdoor Catering Services
The appellant contended that they did not provide outdoor catering services but merely supplied food to employees, arguing that it constituted a sale of food items subject to Maharashtra VAT. They relied on precedents like Rajeev Kumar Gupta vs. Commissioner of Central Excise and Commissioner of Service Tax, Bangalore vs. LSG Sky Chef India Pvt. Ltd. However, the Revenue argued that the services were provided to the company, not the employees, and cited cases like Raj Kumar Jain vs. Commissioner of Central Excise and Tamil Nadu Kalyana Mandapam Assn Vs. Union of India to support their stance. The Tribunal analyzed the transaction nature, emphasizing that the service was rendered to the company, not the employees, and concluded that the appellant's services qualified as outdoor catering services, subject to service tax liability.

Issue 2: Financial Hardship and Stay
The appellant pleaded financial difficulty, citing a low share capital and substantial losses. However, the Tribunal found that the losses claimed were covered by subsidies from the company, negating the financial hardship argument. Consequently, the plea for a stay based on financial difficulty was dismissed. The Tribunal directed the appellant to make a pre-deposit of 50% of the service tax demand within eight weeks, with the balance amount waived upon compliance, and recovery stayed during the appeal's pendency.

In conclusion, the Tribunal upheld the service tax liability on the appellant's outdoor catering services, ruling in favor of the Revenue's interpretation. Additionally, the Tribunal rejected the plea for a stay based on financial hardship due to the subsidies covering the claimed losses.