Service Tax on service rendered by Outdoor Caterers and Pandal or Shamiana Operators — Instruction and Procedure thereof - Service Tax - 09/97 - Rajkot

Attention of the General Public, Trade, Outdoor Caterers and Pandal or Shamiana are invited to the Section 88 of the Finance Act, 1997 which, inter alia, provides for levy of service tax on the services rendered by Outdoor Caterers and Pandal or Shamiana Contractors. 2. The levy of service tax on these services will come into force from 1st August, 1997 ( Notification Nos. 28/97-S.T. to 35/97-S.T. all dated the 25th July, 1997 refers). These notifications have been issued to define the person responsible for collecting the service tax in relation to services provided by Outdoor Caterers and Pandal or Shamiana Contractors and service tax leviable thereon. In the context of these two services certain points have been raised for clarification which are discussed below : 3. Outdoor Caterers : 3.1 As per Section 88 of the Finance Act, 1997, caterer has been defined to mean any person who supplied, either directly or indirectly, any food, edible preparations, alcoholic or non-alcoholic beverages or crockery and similar articles or accoutrements for any purpose or occasion and an outdoor caterer has been defined as a caterer engaged in providing services in connection with catering at a place other than his own. 3.2 Further, the taxable service rendered by an `outdoor caterer means any service provided to a client by an outdoor caterer. The service tax is chargeable at the rate of 5% and the value of the taxable service in relation to service provided by an outdoor caterer to a client, is the gross amount charged by such caterer from the client for services in relation to such catering including the charges for food, edible preparations, alcoholic or non-alcoholic beverages or crockery and similar articles or accoutrements for any purpose or on any occasion. In cases where the outdoor caterer provides services of catering inlcuding supply of food an abatement of 50% of the total amount charged has been provided ( Notification No. 30/97-S.T. refers) subject to the condition that the bills issued in this regard indicate clearly that it is inclusive of the cost of food, eatables, etc. 3.3 In case of catering services provided in the premises of an office, factory or similar establishments by a caterer who is also based/located within such premises, taxable service in excess of twenty per cent of the gross amount charged from the client for such services is exempted ( Notification No. 31/97-S.T. refers). In other words, service tax effectively payable will be 1% of the gross bill charged to the client by the outdoor caterer in such cases. These also cover industrial caterers who provide catering under contract on an annual/periodicals basis and where the cooking/catering is done at the premises of the industry or factory. However catering provided in hospitals, medical institutes, schools, colleges and other academic institutions has been exempted from the levy of service tax ( Notification No. 32/97-S.T. refers). 3.4 In the case of catering provided in trains by the Railways service tax has been exempted vide Notification No. 33/97-S.T. Service tax will however be attracted on in-flight catering services provided to the airlines by catering contractors/star hotels etc. 4. Pandal or Shamiana Contractors : 4.1 As per Section 88 of the Finance Act, 1997, `Pandal or Shamiana means a place specially prepared or arranged for organising an official, social or business function and a `pandal or shamiana contractor means a person engaged in providing any service, either directly or indirectly, in connection with the preparation, arrangement, erection or decoration of a pandal or shamiana and includes the supply of furniture, fixtures, lights and lighting fittings, floor coverings and other articles for use therein. 4.2 The taxable service rendered by a pandal or shamiana contractors means any service to a client, by a pandal or shamiana contractor in relation to a pandal or shamiana in any manner and also includes the services, if any, rendered as a caterer. The rate of service tax is 5% and the value of taxable service in relation to service provided by a pandal or shamiana contractor to a client, is the gross amount charged by such contractor from the client for services in relation to the setting up of a pandal or shamiana including the supply of furniture, fixtures, lights and lighting fittings, floor coverings and other articles used therein also the charges for catering, if any. In cases where the pandal contractor also provides services of catering and charges the customer on lump sum basis an abatement of 30% of the total amount charged could be given for the purposes of the service tax. In other words, service tax would be leviable on 70% of the total amount charged in such cases ( Notification No. 34/97-S.T. refers). 4.3 Service tax levy on services rendered by pandal or shamiana contractors based in rural areas and who are carrying their business within such area has been exempted ( Notification No. 35/97-S.T. refers). For the purpose of this exemption the expression `rural areas means the area comprised in any village, and includes the area comprised in any town, the population of which does not exceed twenty thousand or such other figure as the Central Government may specify from time to time. 4.4 Where the pandal contractor provides free services, say for religious events, there will be no tax liability. Similarly in the cases of cancellation of the booking made by the client no service rendered and hence there shall be nil service tax liability. General : 5.1 As per Section 69 of the Finance Act, 1994 , read with Rules 3 and 4 of the Service Tax Rules, 1994 , every person responsible for collecting the service tax is required to be registered with the concerned Central Excise Officer appointed under Rule 3. Notification No. 29/97-Service Tax, dated 25-7-1997 amends Rule 2 of the said rules so as to prescribe that the person responsible for collecting the service tax in relation to the services provided by an outdoor caterer shall be outdoor caterer who raises the bill for such services rendered to a client and the person responsible for collecting the service tax in relation to services provided by the pandal or shamiana contractor shall be the pandal or shamiana contractor who raises a bill for such services rendered to a client. Rules relating to levy of service tax on other services are already in existence. Registration : In regards the registration of Outdoor Caterers and Pandal or Shamiana Contractors/Operators, they shall make an application in ST-1 Form to jurisdictional Central Excise Division. The Asstt. Commissioner in charge of the Division is the proper officer for the service tax on Outdoor Caterers and Pandal or Shamiana. The Assessee will apply for registration Form ST-1 . An acknowledgement will be provided in the duplicate copy of the ST-1 Form by the Superintendent of Central Excise. The registration certificate will have to be granted in Form ST-2 appended to the Rules, within 7 days from the date of receipts of application for registration. If the registration certificate is not granted within the said period the registration applied for shall be deemed to have been granted. Payment of Service Tax : Rule 6 of the Service Tax Rules, 1994 , deals with the payment of service tax. A copy of TR 6 Form is enclosed as Annexure IV [Not printed] for the purpose of deposit of service tax. The service tax will be deposited under Head 0044. The concept of provisional assessment has been built into the scheme of Service Tax Rules. Whenever an assessee is, for any reason, unable to correctly estimate the date of deposit the actual amounts, collected for any particular month or period, the assessee may make a request in written to the Central Excise Officer to make a provisional assessment of the tax on the basis of the amount deposited. The Central Excise Officer, may, on the receipt of such request, order provisional assessment of tax. In this regard the provisions of the Central Excise Rules, 1944 have been made applicable except for the provisions of the bond. The assessment will be made quarterly when the assessee files the quarterly return in Form ST 3 in triplicate. In the case of provisional assessment the assessee is required to submit a memorandum in Form ST 3A showing details of difference between the service tax deposited and the service tax actually collected for each month. The assessee shall submit quarterly return along with the copy each of the Form TR 6 for the month covered in the quarter. The assessment shall be completed on the basis of the particulars furnished in the quarterly return ST 3 and ST 3A wherever submitted. The triplicate copy of the quarterly return assessed shall be sent to the assessee. In cases where the service tax assessed is more than the service tax determined and paid by the assessee, the assessee shall pay the deficiency along with the amount of interest determined thereon within 10 days of the receipt of copy of the quarterly return from the Central Excise Officer. The assessee may also apply for refund whenever he has paid service tax more than the tax assessed in accordance with the provision of Section 11B of the Central Excises and Salt Act, 1944. Appellate Mechanism : Appellate mechanism relating to Central Excise have been made applicable for the purpose of service tax also with necessary modifications. There will be no visit by the Central Excise Officers to the premises of the assessee of service tax for carrying out any routine checks. Assistant Commissioners will be required to accord permission for visit of any officer lower in rank. The search powers will be exercised by the Assistant Commissioner with the approval of Commissioner.