2009 (1) TMI 169 - AT - Service Tax

Outdoor Catering Services - non payment of service tax on the gross amount received from M/s. Kingfisher Airlines for in-flight catering from November 2005 to May 2006. Consequently, proceedings were initiated for short levy held that - It is very clear that Article 369 (29A) specifically provides a legal fiction in respect of catering contracts where the contracts can be divisible into two components, i.e. service portion and sale of goods portion. As far as the sale of goods portion is concerned, it is very clear that VAT or sale tax has already been discharged by the appellants. Once the sale tax has already been discharged by them, they cannot be asked to pay service tax on the same value. - the benefit of Notification No. 12/2003-ST is available to all the services. There is an exclusion of the value of the goods sold during their rendering of service. In this case, it is very clear in view of the separate invoices raised that the food/beverages supplied have been separately paid for Demand and penalties set aside.

Summary

The Appellate Tribunal CESTAT Bangalore issued a final order in the case of M/s. Sky Gourmet Pvt. Ltd. against the Order-in-Original No. 88/2007 dated 18.09.2007, passed by the Commissioner of Service Tax, Bangalore. The Revenue and the assessee both filed appeals against the order. The Revenue proceeded against the assessee for not paying service tax on the gross amount received from M/s. Kingfisher Airlines for in-flight catering. The Commissioner held that the appellants were not entitled to the benefit of Notification No. 12/2003-ST, but gave them the benefit of Notification No. 20/2004-ST and 1/2006-ST and an abatement of 50% in terms of the said Notifications. The issue before the Tribunal was whether the assessee providing 'Outdoor Catering Service' is liable to pay service tax on the value of the goods sold to the recipients of service and ineligible for the benefit of the Notification No. 12/2003-ST. The Revenue also filed a cross objection. The Tribunal dismissed the appeal and cross objection and pronounced the final order on 30/01/200 inn the case of M/s. Sky Gourmet Pvt. Ltd. 2009. \n\n====================\n\nThe judgement was delivered by Shri T.K. Jayaraman, Member (Technical) and Shri M.V. Ravindran, Member (Judicial). The appellants and the Revenue both filed appeals against the Order-in-Original No. 88/2007 dated 18.09.2007, passed by the Commissioner of Service Tax, Bangalore. The issue before the Tribunal was whether the assessee providing 'Outdoor Catering Service' is liable to pay service tax on the value of the goods sold to the recipients of service and ineligible for the benefit of Notification No. 12/2003-ST. The Revenue has also filed a cross objection in respect of the appeal filed by the party. The Tribunal heard both sides in the matter. The assessee

The appellant, M/s. Sky Gourmet Catering Pvt. Ltd., are engaged in the sale and supply of the food, beverage, and dry stores to the airlines. They had obtained service tax registration under the classification of 'Outdoor Catering Services' under Section 65 (76a) of the Finance Act, 1994. Revenue proceeded against the assessee on the ground that they had not paid service tax on the gross amount received from M/s. Kingfisher Airlines for in-flight catering from November 2005 to May 2006. Proceedings were initiated for short levy. The Commissioner held that the appellants were not entitled to the benefit of Notification No. 12/2003-ST dated 20.6.2003. However, he gave the appellants the benefit of Notification No. 20/2004-ST and 1/2006-ST and gave an abatement of 50% in terms of the said Notifications. Apart from confirming the demand, penalties under various Sections of the Finance Act, 1994 have been imposed historians. this

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is. The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The The . Since . The The The The The The The . Davidson. Davidson. Davidson. Davidson. The S Do .. The The The The The The The of . of of .. Davidson. of of . 2. The Commissioner held that the appellants were not entitled to the benefit of Notification No. 12/2003-ST dated 20.6.2003. However, he gave the appellants the benefit of Notification No. 20/2004-ST and 1/2006-ST and gave an abatement of 50% in terms of the said Notifications. Apart from confirming the demand, penalties under various Sections of the Finance Act, 1994 have been imposed. In fact, the penalty under Section 78 is Rs. 32,00,000/-, whereas the differential duty demanded is only Rs. 21,26,424/-. The issue before the Tribunal is whether the assessee providing 'Outdoor Catering Service' is liable to pay service tax on the value of the goods sold to the recipients of service and ineligible for the benefit of Notification No. 12/2003-ST dated 20.6.2003. The Revenue has also filed cross objection in respect of the appeal filed by the party. In Para 2 of the cross objection, it has been stated that the activity of the party at best could be construed as an amalgamation of sale and service rendered to their clients. In Para 4 of the cross objections, it has been stated that the appellants have cautiously and deliberately prepared two sets of invoices, one for the cost of food/beverage supplied and the other towards the service portion with the purpose of foregoing the abatement of 50% available, under Notification No. 20/2004-ST dated 10.9.2004 and Notification No. 1/2006-ST dated 1.3.2006 and instead avail the benefit of Notification No. 12/2003-ST dated 20.6.2003. On behalf of the appellants, the following points were urged:

(i) Notification No. 12/2003-ST dated 20.6.2003 exempts the value of all the taxable services, as is equal to the value of goods and materials sold by the service provider to the recipient of the service from the service tax leviable thereon under Section 66 of the Finance Act, 1994 subject to the condition that there is documentary proof specifically indicating the value of the said goods and materials.

(ii) It was urged that the Notification No. 12/2003-ST would be applicable to all the taxable services. The appellants sold the food, beverages and dry stores under separate invoices on payment of VAT, which is admitted by the department. The invoices for sale of goods to the receipt of service are sufficient documentary proof. Hence it was argued that the finding of the Commissioner in Para 4 of the impugned order that the assessee does not satisfy the conditions prescribed under Notification No. 12/2003-ST is not applicable and is devoid of merits.

(iii) It was also argued that when two Notifications are available, the assessee always has an option of choosing the one. It ...

The case was heard by the Honorable Judge Shri T.K. Jayaraman and Shri M.V. Ravindran. The Revenue and the appellant both filed appeals against the Order-in-Original No. 88/2007 dated 18.09.2007, passed by the Commissioner of Service Tax, Bangalore. The Commissioner held that the appellants were not entitled to the benefit of Notification No. 12/2003-ST dated 20.6.2003. The Revenue has also filed cross objection in respect of the appeal filed by the party. The issue before the Tribunal is whether the assessee providing 'Outdoor Catering Service' is liable to pay service tax on the value of the goods sold to the recipients of service and ineligible for the benefit of Notification No. 12/2003-ST dated 20.6.2003. The Revenue has also filed cross objection in respect of the appeal filed by the party. The Tribunal heard both the sides in the matter. The assessee, M/s. Sky Gourmet Catering Pvt. Ltd. are engaged in the sale and supply of the food, beverage and dry stores to the airlines. They had obtained service tax registration under the classification of 'Outdoor Catering Services' under Section 65 (76a) of the Finance Act, 1994. Revenue proceeded against the assessee on the ground that they had not paid service tax on the gross amount received from M/s. Kingfisher Airlines for in-flight catering from November 2005 to May 2006. The Commissioner held that the appellants were not entitled to the benefit of Notification No. 12/2003-ST dated 20.6.2003. However, he gave the appellants the benefit of Notification No. 20/2004-ST and 1/2006-ST and gave an abatement of 50% in terms of the said Notifications. The issue before the Tribunal is whether the assessee providing 'Outdoor Catering Service' is liable to pay service tax on the value of the goods sold to the recipients of service and ineligible for the benefit of Notification No. 12/2003-ST dated 20.6.2003. The Revenue has also filed cross objection in respect of the appeal filed by the party. The Tribunal heard both the sides in the matter. The assessee, M/s. Sky Gourmet Catering Pvt. Ltd. are engaged in the sale and supply of the food, beverage and dry stores to the airlines. They had obtained service tax registration under the classification of 'Outdoor Catering Services' under Section 65 (76a) of the Finance Act, 1994. The Commissioner held that the appellants were not entitled to the benefit of Notification No. 12/2003-ST dated 20.6.2003. However, he gave the appellants the benefit of Notification No. 20/2004-ST and 1/2006-ST and gave an abatement of 50% in terms of the said Notifications. The issue before the Tribunal is whether the assessee providing 'Outdoor Catering Service' is liable to pay service tax on the value of the goods sold to the recipients of service and ineligible for the benefit of Notification No. 12/2003-ST dated 20.6.2003. The Revenue has also filed cross objection in respect of the appeal filed by the party. The Tribunal heard both the sides in the matter. The assessee, M/s. Sky Gourmet Catering Pvt. Ltd. are engaged in the sale and supply of the food, beverage and dry stores to the airlines. They had obtained service tax registration under the classification of 'Outdoor Catering Services' under Section 65 (76a) of the Finance Act, 1994. Revenue proceeded against the assessee on the ground that they had not paid service tax on the gross amount received from M/s. Kingfisher Airlines for in-flight catering from November 2005 to May 2006. The Commissioner held that the appellants were not entitled to the benefit of Notification No. 12/2003-ST dated 20.6.2003. However, he gave the appellants the benefit of Notification No. 20/200 1/2006-ST and gave an abatement of 50% in terms of the said Notifications. The issue before the Tribunal is whether the assessee providing 'Outdoor Catering Service' is liable to pay service tax on the value of the goods sold to the recipients of service and ineligible for the benefit of Notification No. 12/2007. The Revenue has also filed cross objection in respect of the appeal filed by the party. The Tribunal heard both the sides in the matter. The appellant, M/s. Sky Gourmet Catering Pvt. Ltd. are engaged in the sale and supply of the food, beverage and dry stores to the airlines. They had obtained service tax registration under the classification of 'Outdoor Catering Services' under Section 65 (76a) of the Finance Act, 1994. Revenue proceeded against the assessee on the ground that they had not paid service tax on the gross amount received from M/s. Kingfisher Airlines for in-flight catering from November 2005 to May 2006. The Commissioner held that the appellants were not entitled to the benefit of Notification No. 12/2007. The Commissioner held that the appellants were not entitled to the benefit of Notification No. 12/2003-ST dated 20.6.2003. However, he gave the appellants the benefit of Notification No. 20/2004-ST and 1/2006-ST and gave an abatement of 50% in terms of the said Notifications. The issue before the Tribunal is whether the assessee providing 'Outdoor Catering Service' is liable to pay service tax on the value of the goods sold to the recipients of service and ineligible for the benefit of Notification No. 12/2007. The Revenue has also filed cross objection in respect of the appeal filed by the party. The Tribunal heard both the sides in the matter. The assessee, M/s. Sky Gourmet Catering Pvt. Ltd. are engaged in the sale and supply of the food, beverage and dry stores to the airlines. They had obtained service... 3. The learned SDR reiterated the impugned a

The learned SDR reiterated the impugned order. She stated that in terms of the law, the appellant is liable to discharge service tax liability on the gross amount received and the abatement can be given only wherever it is provided. She referred to the Notification No. 20/2004-ST and stated that the Commissioner has rightly given the benefit of the Notification and since he has given the benefit of the Notification, the appellants would not be entitled for availing the benefit of Notification No. 12/2007. 4. On a very careful consideration of the issue, we find that the appellants are registered under the category of 'Outdoor Catering Services'. Though in their appeal, they made a point that they would not be liable to service tax under the category of 'Outdoor Catering Services', when the argument was before this Bench that approach had been given up and they were mainly urging the point that they would be entitled for benefit of exemption Notification No. 12/2003-ST. It is seen that the appellants had already discharged service tax liability on the gross receipt excluding the cost of the food, beverages, etc. This is not in dispute. As regards the legal position with regard to the exclusion of the cost of food and beverages, we have to go first to the Constitutional amendment, the 46th amendment of the Constitution of India wherein Article 366 (29A) was introduced. The said Article is reproduced herein below: "(29A) 'tax on the sale or purchase of goods' includes - (a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration. (b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. (c) a tax on the delivery of goods on hire-purchase or any system of payment of instalments. (d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration. (f) a tax on the supply, by way of or as a part of any service, of any goods, being food or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other articleq on the supply, by way of or as a part of any service, of any goods, being food or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption or any drink or any other article for human consumption Mat 6:11 Give us this day our daily bread. Mat 6:12 And forgive us our debts, as we forgive our debtors. Mat 6:13 And lead us not into temptation, but deliver us from evil: For thine is the kingdom, and the power, and the glory, for ever. Amen. Mat 6:14 For if ye forgive men their trespasses, your heavenly Father will also forgive you: Mat 6:15 But if ye forgive not men their trespasses, neither will your Father forgive your trespasses. Mat 6:16 Moreover when ye fast, be not, as the hypocrites, of a sad countenance: for they disfigure their faces, that they may appear unto men to fast. Verily I say unto you, They have their reward. Mat 6:17 But thou, when thou fastest, anoint thine head, and wash thy face; Mat 6:18 That thou appear not unto men to fast, but unto thy Father which is in secret: and thy Father, which seeth in secret, shall reward thee openly. Mat 6:19 Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal: Mat 6:20 But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal: Mat 6:21 For where your treasure is, there will your heart be also. Mat 6:22 The light of the body is the eye: if therefore thine eye be single, thy whole body is full of light. Mat 6:23 But if thine