Imposition of Service Tax on Outdoor Caterers & Pandal or Shamiana Contractors - Service Tax - 62/97. CE (SERVICE TAX)/97

Imposition of Service Tax on Outdoor Caterers Pandal or Shamiana Contractors NO.CE-20/ST/ Trade Notice/97 Dated. 5.8.97 TRADE NOTICE NO. 62/97. CE (SERVICE TAX)/97 Attention of the trade is invited to this Office Trade Notice No. 58CE(Service Tax)/97 dated 29.7.97 through which it has been informed about the imposition of service tax on the services rendered by Outdoor Caterers and Pandal or Shamiana Contractors w.e.f. 1 st August, 1997 in terms of Notification No. 28/97 to 35/97 dated 25.7.97 - Govt. of India, Ministry of Finance, Department of Revenue. 2. It is felt that some clarification in respecto of these two services for guidance would be benefical to Trade industry and Public. 3. OUTDOOR CATERERS: 3. 1 As per Section 88 of the Finance Act, 1997 caterer has been defined to mean any person who supplies, either directly or indirectly, any food, edible preparations, alcoholic or non-alcoholic beverages or crockery and similar articles or accouterments 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 services 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 provided by an outdoor caterer to a client for services in relation to such catering including the caharges for food, deible 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 including supply of food an abatement of 50% of the total amount charged has been provided (Notification No. 30/97-ST 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 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-ST 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 an annual/peridical basis and where the cooking/catering is done at the premises of the industry or factory, however catering provided in of the industry or factory, however catering provided in hospitals, medical instutes, shcools, colleges and other academic institutions has been exempted from the levy of service tax (Notification No. 32/97-ST refers). 3.4 In the case of catering provided in trains by the Railway service tax has been exempted vide Notification No. 33/97-ST. Service Tax will however be attracted on inflight catering services provided to the airlines by catering contractors/star hotels etc. 4. PANDAL OR SHAMINANA CONTRACTORS: 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 connecting 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; 2. The taxable service rendered by a pandal or shamiana contractor 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 lumpsum 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-ST refers). 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-ST 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. 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. 5. GENERAL 1. As per section 69 of the Finance Act, 1994 read with rules 3 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 Office appointed under Rule 3. Notification No. 28/97-ST to 35/9-ST Service Tax, dated 25.7.97 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 bill for services rendered to a client. 2. Rules relating to service tax on other services have already been notified and the trade is advised to go through them. However, for the benefit of the services which are to be covered by the Notifications No. 28/97 to 35/97-ST. Service Tax dated 25.7.97 the procedure to be followed for registration, maintenance of documents, filling of returns and the manner in which the service tax is to be paid and which were contained in chapter v of the Finance Act,1994, notified to the trade vide this Commissionerate Trade Notice No. 46-CE (Misc 46)/94 dt. 7.7.94 are reproduced alongwith annexures as amended from time to time and by the Finance Act, 1997. Registration : 3. The assessees will apply for registration in form ST-1 (annexure-I). An acknowledgement will be provided on the duplicate copy of the ST-1 form by the Superintendent of Central Excise (Service Tax). Registration No. will be allotted on receipt of their application. Payment of Service Tax: 4. Rule 6 of the Service Tax Rules, 1994, deals with the payment of Service Tax. The service tax will be deposited under Head 0044, in form TR-6 in yellow colour as amended vide Service Tax Circular No. 17/11/96 dated 24.10.96 (a copy of which is enclosed as Annexure -II ) in any of the bank branches, at present authorised to collect Central Excise Duties within is the jurisdiction of Commissionerate of Central Excise, Delhi-1. A list of such branches alongwith the codes Nos.(Annexure-III) is enclosed. It is to be noted that each assessee shall choose only one branch convenient to him and all payment shall be made in that branch only. 5. The concept of provisional assessment has been built into the scheme of the Service Tax Rules. Whenever an assessee, for any reason, unable to correctly estimate on the date of deposit, the actual amounts collected for any particular month or period, the assessee may make a request in writing to the concerned Assistant Commissioner of Central Excise (Service Tax), to make a provisional assessment of the tax on the basis of the amount deposited. The said Central Excise Rules, 1944, have been made applicable. However, there is no requirement to enter into a bond in respect of service tax. 6. The assessees will file the quarterly return in Form ST-3 as amended vide Notification No. 15/97 dated 25.4.97 in (Annexure-IV) in triplicate. In respect of provisional assessment, the assessee is required of provisional memorandum in Form ST-3A (Annexure V) showing details of difference between the service tax deposited and the service tax actually collected for each month. The assessee shall submit quarterly return alongwith the copy each of form TR-6 for the months covered in the quarter. 7. The assessment shall be completed on the basis of the particulars furnished in the quarterly return ST-3 and ST-3A, by the said Central excise Officer. The triplicate copy of the quarterly return so assessed shall b3e returned to the assessee with assessment memorandum. In cases where the service tax assessed is more than the service tax self determined and paid y the assessee, the assessee shall pay the deficiency alongwith the amount of interest determined thereon within 10 days of the receipt of the copy of the quarterly return from the Central Excise Officer. The assessee may apply for refund, whenever he has paid service tax in excess of tax assessed, in accordance with the provisions of section 11-B of the Central Excise Act, 1944. Appellate Mechanism 6. Appellate mechanism provided in Central excise Act, 1944 has been made applicable to Service Tax with some modifications (Section 85 and Sec. 86) of Finance Act, 1994 maybe referred to) 7. ADMINISTATIVE MACHINERY FOR COLLECTION OF SERVICE TAX A service tax cell has been created in the jurisdiction of Divisional Offices of Delhi-1 Commissionerate of Central Excise. The address and location of Divisional Offices/area are as under: The trade is advised to send all correspondence, applications for registration, returns etc. to the Jurisdictional Divisions as per Annexure-A. 2. The trade may please note that: a. Application for registration in form ST-1 received from the assessee shall be acknowledged by an officer of the rank of Superintendent of Central Excise. b. Certificate of registration in the form ST-2 will be issued under the name and signature of the Assistant Commissioner. c. The Service Tax collected during any calendar month by the Assessee under Sub-section (1) of Section 68 of the Finance Act, 1994 shall be paid to the credit of Central Government in form TR-6 by the 15 th of the following month. d. Any person, responsible for collecting the Service Tax, who fails to collect the Tax in accordance with the provisions of sub-section (II), shall not withstanding such failure be liable to pay such tax to the credit of the Central Government within SEVENTY FIVE DAYS from the end of the month in which the service was rendered. e. Quarterly return filed by the assessee (para 4.7 above) will be assessed by the Superintendent of Central Excise (Service Tax). f. For the purpose of provisional assessment whenever the Asstt. Commissioner will make an order for provisional assessment for the tax, on request being received in writing from the Assessee. g. The powers of Assessment under Sections 72, 73, 74 of Chapter V of the Finance Act, 1994 dealing with best judgment Assessment, value of taxable service, escaping assessment, rectification of mistake will be exercised by the Asstt. Commissioner. In respect of Assessment periods of 5 years or more referred in Section 73 of the Finance Act, 1994 (32 of 1994) Commissioner will be the completent authority to exercise the powers. Sd/- (M. K. ZUTSHI) COMMISSIONER CENTRAL EXCISE-I NEW DELHI. Authority: i. Boards F. No. B-43/8/97-TRU dt. 25.7.97 ii. Notification No. 15/97 dt. 25.4.97 iii. Trade Notice No. 47/96 dt. 4.11.96.