2024 (6) TMI 504 - AT - Service Tax

Levy of service tax - Restaurant Services - sale of food items by way of Take-Away and Home Delivery - HELD THAT - The issue is no longer res integra and has been decided by this Tribunal in the case of Haldiram Marketing Pvt. Ltd. Vs. Commissioner of CGST, GST, Delhi East Commissionerate 2023 (2) TMI 783 - CESTAT NEW DELHI , where the facts and circumstances are identical and hence, the present case is squarely covered by the observations made therein. In the case of Haldiram Marketing Pvt. Ltd., the brief facts noted are that they were engaged in running food outlets, where packaged food items could be purchased and also availed restaurant dining facilities. Additionally, the appellant there also provided the facility of Take Away of food items. On audit, it was noticed that the appellant was providing services in respect of Take Away orders by way of preparing and packaging food items for the customers. The Tribunal, after considering the provisions of Section 65 B(44) read with 66E of the Finance Act also considering the Circular No.334/3/2011- TRU dated 28.02.2011 and the clarification issued thereafter on 13.08.2015 that the transaction involving Pick-up or Home Delivery of the food items sold by the restaurants are not liable to service tax, being in the nature of sale only and no amount is charged for free delivery of food as the dominant nature of the transaction is that of sale and not service, as the food items are not served at the restaurant and there is no other element of service, which is normally offered at the restaurant. Since the facts of the present case are absolutely identical and 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 judgement, the activity of sale of food items by Take Away or Home Delivery by the appellant is not liable to service tax. The impugned order deserves to be set aside - Appeal allowed.

Summary

Issues:
1. Taxability of sale of food items through "Take-Away" and "Home Delivery" under Restaurant Services.

Detailed Analysis:
The appellant challenged the order confirming the demand of service tax on the sale of food items through "Take-Away" and "Home Delivery" under Restaurant Services. The appellant was registered under various taxable categories, including Restaurant Service. The audit team observed the sale of food items through "Take-Away" and "Home Delivery" during the financial years 2013-14 and 2014-15. A show cause notice was issued, leading to the confirmation of the demand along with interest and penalty. The issue revolved around whether these activities amounted to taxable service under Restaurant Service.

The Tribunal referred to a previous case involving similar facts, Haldiram Marketing Pvt. Ltd. Vs. Commissioner of CGST, GST, Delhi East Commissionerate, where it was held that the sale of food items through "Take-Away" or "Home Delivery" does not attract service tax as it constitutes a sale and not a service. The Tribunal considered the provisions of the Finance Act, Circulars, and previous judicial decisions to conclude that the dominant nature of the transaction in such cases is that of sale, not service. The Tribunal emphasized that services like dining facilities, table clearing, and food preparation are not involved in "Take-Away" transactions, leading to the activity being classified as a sale of goods rather than a service.

Based on the precedent set in the Haldiram case and the absence of any service element in the sale of food items through "Take-Away" or "Home Delivery," the Tribunal ruled in favor of the appellant. The Tribunal held that the activity of selling food items through "Take-Away" or "Home Delivery" does not attract service tax and is purely a sale of goods. Consequently, the impugned order confirming the demand of service tax was set aside, and the appeal by the appellant was allowed.