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TMI Blog2011 (1) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... vice in relation to use of Mandap was specifically included within the purview of this service. The service tax is chargeable on this service at the ad-valorem rate prescribed under section 66 of the Finance Act, 1994, on the assessable value determined under section 67 ibid read with Service Tax (Determination of Value) Rules, 2006 and when the entire consideration for service is in money, the assessable value would be the gross amount charged. However Exemption Notification No. 1/06-ST, dated 1-3-2006 issued under section 93 of the Finance Act, 1994 and its predecessor Notification No. 21/97-ST, dated 26-6-1997 as amended by Notification No. 12/04-ST, dated 10-9-2004 exempt the service provided by a Mandap Keeper, when the Mandap keeper also provides catering services, that is supply of food during the service in relation to use of Mandap, from so much of the service tax leviable thereon as is in excess of the amount of service tax calculated on sixty per cent of the gross amount charged from the client by the Mandap Keeper. The expression 'food' for the purpose of this notification means substantial and satisfying meal. The exemption, however, is available subject to the conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17249- 251 dt. 22-5-2007 Rs. 1,16,90,589 alongwith interest u/s 75 of Finance Act, 1994 and also for imposition of penalty under sections 76 and 78 ibid 1-3-2005 to 30-9-2006 2. S T / 2 9 / A d j - 1/07/7659 dated 2-4-2008 Rs. 60,26,569 & Rs. 1,00,92,224 alongwith interest under section 75 of the Finance Act, 1994 1-10-2006 to 31-3-2007 ; and 3. S T / 3 7 / A d j - 1/08/25875 dated 23-9-08 and also for imposition of penalty under sections 76 and 78 ibid 1-4-2007 to 31-3-2008 4. S T / 4 1 / A d j . - 1/2009/26567 dt. 15-10-2009 Rs. 1,29,44,543 alongwith interest u/s 75 of Finance Act, 1994 and also for imposition of penalty under sections 76 and 78 ibid 1-4-2008 to 31-3-2009 1.3.1 The SCN dated 22-5-2007 at S. No. 1 was adjudicated by the Commissioner vide order in original No. 1/Commr/ST/IND/08, dated 14-3-2008 and the SCNs dated 2-4-2008 & 23-9-2008 were adjudicated by the common order-in-original Nos. 11-12/Commr/ST/IND/2009, dated 26-2-2009. By these orders, the Commissioner, while holding that Notification No. 12/03-ST was not available to the Appellant, held that the benefit of Notification Nos. 21/97-ST & 1/06-ST would be available. Accordingly, the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the Tribunal's order regarding pre-deposit, directed the Tribunal to decide the appeal alongwith the earlier appeals without insisting on the pre-deposit within a period of eight weeks from the date of receipt of copy of this order. In this regard, the direction of Hon'ble Court in para 12 of its order are reproduced below :- "12. The Tribunal is directed to decide the petitioner's appeal on merits without insisting on pre-deposit. We record the statement of the learned counsel for the petitioner that the petitioner is ready and willing to get its all the aforesaid three appeals decided as expeditiously as possible. In order to avoid undue delay, we direct the Tribunal to decide all the aforesaid appeals of the petitioner finally within a period of 8 weeks from the date of receipt of copy of this order. The petitioner shall cooperate in disposal of its appeals within the time fixed." Accordingly these three appeals alongwith the Department's Cross Objection No. ST/CO/267/08 in respect of appeal No. ST/347/08 were taken up for hearing. 2. Heard both the sides. 2.1 Shri V. Laxmi Kumaran, Advocate, the learned Counsel for the Appellant, made the following o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the benefit under Notification No. 12/03-ST. If Notification No. 12/03-ST is not available at all to Mandap Keeper Service providers, this proviso to Notification No. 1/06-ST will become redundant. (4) The Appellant have fulfilled the conditions of Notification No. 12/03-ST ; as (a) there is sale of food and beverages, in question, by the Appellant to their customers; (b) separate invoices have been raised in respect of value of food and beverages sold and the value of banquet hall charges/service charges which are a clear documentary proof of value of food and beverages sold ; and (c) no Cenvat credit was availed in respect of food and beverages sold. (5) Serving of food and beverages by the Appellant in course of providing services in relation to use of Mandap is sale of food and beverages simpliciter to their customers (hosts). The invoices for sale of food and beverages show only the value of the food and beverage sold out and do not include the value of services provided alongwith sale of food. The charges for serving the food and drinks are included in the charges for service in relation to use of Mandap on which Service Tax has been paid. Hon'ble Delhi H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Tribunal in the cases of (a) Daspalla Hotels Ltd. v. CCE [2010] 24 STT 200 (Bang. - CESTAT) and (b) Sky Gourmet (P.) Ltd.'s case (supra) wherein it was held that benefit of exemption under Notification No. 12/03-ST in respect of value of food and beverages supplied would be available to a Mandap Keeper and outdoor catering. (10) Even if Notification No. 12/03-ST is not available, the benefit of Notification No. 1/06-ST in appeal No. ST/462/2010 cannot be denied subject to reversal of Cenvat credit on input services availed. In this regard, reliance is placed on Tribunal's judgment in case of CCE&C v. Ram Krishna Travels (P.) Ltd. [2009] 23 STT 186 (Ahd. - CESTAT). (11) There is no suppression of facts, wilful, mis-statement etc. on the part of the Appellant. Hence, a part of the demand covered by appeal No. 374/08 is time barred. Since there is no fraud, suppression of facts, wilful mis-statement etc. with intent to evade the payment of tax, penalty under section 78 of Finance Act, 1994 is not warranted. 2.2 Shri Sumit Kumar, the learned DR made the following oral as well as written submissions : (i) Serving of the food and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST. (vi) Hon'ble Supreme Court in paras 55, 56 and 57 of its judgment in case of Tamil Nadu Kalyana Mandapam Association v. Union of India 2004 (167) ELT 3 has held that a tax on services rendered by Mandap Keepers and outdoor caterers is in pith and substance, a tax on services and not a tax on sale of goods or on hire purchase activities. Hon'ble Kerala High Court in the case of Saj Flight Services (P.) Ltd. v. Superintendent of Central Excise [2006] 3 STT 165 in para 5 of the judgment, has held that payment of sales tax treating the service of food and beverages by the caterers to aircraft as sale of goods under section 2(29) of Kerala General Sales Tax Act, introduced after 46th Constitution amendment, does not exonerate the petitioner from liability for service under the Central legislation which is upheld by the Supreme Court and that since service of food and beverages by caterers to aircraft amounts to sale of goods as well as rendering of service, both service tax and sales tax under the respective provisions can be levied on the very same transaction. Therefore, just because sales tax has been paid on the charges for food and drinks served, it does not mean that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of Imagic Creative (P.) Ltd. (supra) is of no relevance to this case, as in this case, the issue involved is totally different. Notification No. 12/03-ST claimed by the Appellant is not admissible to them even if sales tax is paid by them on the supply of food and beverages. Hon'ble Supreme Court in case of Tamil Nadu Kalyana Mandapam Association (supra) on the question as to whether in view of the deeming provisions of Article 366 (29A)(f) of the Constitution, the "serving of food" which otherwise is not a sale transaction should be deemed as sale transaction and its value excluded for the purpose of charging service tax on service in relation to use of Mandap, held that Article 366(29A)(f) only permits the state to impose a sales tax on the supply of food and drinks by whatever mode it may be made and it does not conceptually or otherwise bring the supply of food and drinks by a Mandap Keeper within the definition of sale or purchase of goods. Hon'ble Court, therefore, held that service tax on service in relation to use of Mandap is leviable on the gross amount charged by the Mandap Keeper for services in relation to use of Mandap including the charges for foods and drink ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegal or wrong about separating the bills relating to the value of Mandap Keeper service and sale value of food and beverages. The Appellant had adopted this practice since March 2005 in order to qualify for the requirement of Notification No. 12/03-ST which requires documentary proof regarding value of goods and materials sought to be excluded. Such a tax planning done by the Appellant cannot be the ground for denial of the exemption under Notification No. 12/03-ST. 3. We have carefully, considered the submissions from both the sides and perused the records. The undisputed facts are that :- (a) The Appellant provide the service in relation to use of Mandap to their customers, which is taxable under section 65(105)(m) readwith section 65(66) and 65(67) of the Finance Act, 1994; (b) In course of providing the above service by providing temporary occupation of a Mandap for a consideration for organising any official, a social or business function, they also provide service as a caterer (as defined in section 65(24) ibid), or in other words, they serve food and beverages to the guests of the customers; (c) Upto 28-2-2005, the Appellant were discharging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... music, catering service etc. and as such, their is no sale of food or beverages involved and that by treating the supply of food and beverages in course of catering service provided by the Appellant as deemed sale under Article 366(29A)(f) of the Constitution of India for the purpose of charging Sales Tax/VAT, such supply cannot be treated as "sale of food and beverages " for the purpose of Notification No. 12/03-ST. The department's contention, therefore, is that Notification No. 12/03-ST is not available to the Appellant and that they can avail only the Notification No. 21/97-ST or its successor Notification No. 1/06-ST by following its conditions. 4. Mandap Keeper Services during the period prior to 16-6-2005 was defined in section 65(105)(m) of the Finance Act, 1994 as -"Service provided to a client by a Mandap Keeper in relation to the use of Mandap in any manner including the facilities provided in relation to such use" With effect from 16-6-2005, the definition of Mandap Keeper Service in section 65(105)(m) is - "Service provided or to be provided to any person by a Mandap Keeper in relation to the use of Mandap in any manner including the facilities provided to suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring service. In fact, on this point, there is no dispute in this case. The dispute is as to whether only the exemption Notification No. 21/97-ST or its successor Notification No. 1/06-ST can be availed by the Appellant or whether the Appellant have the option to avail the general exemption Notification No. 12/03-ST also. 5. Notification No. 21/97-ST and its successor Notification No. 1/06-ST issued under section 93(1) of the Finance Act, 1994, exempt the service in relation to use of Mandap provided by a Mandap keeper or by a hotel as Mandap keeper from the Service Tax, as is in excess of the amount of Service Tax calculated, which is equivalent to 60% of the gross amount charged for that service, subject to conditions that - (i) The Mandap Keeper also provides catering service, that is, supply of food and the invoice bill or challan issued indicates that it is inclusive of the charges for catering service the "food" being substantial and satisfying meal; (ii) No Cenvat Credit of duty on inputs or capital goods and of Service Tax on input services used for providing the service in relation to use of Mandap has been taken under Cenvat Credit Rules, 2004, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds and materials. (ii) No credit of duty paid on such goods and materials sold has been taken under the provision of Cenvat Credit Rules, 2004, and (iii) When such credit has been taken by the service provider on such goods and materials, such service provider has paid the amount equal to such credit availed before the sale of such goods and materials. The Appellant claim this exemption on three grounds - (a) The Appellant's transactions as Mandap keeper with their customers are the transactions of sale as well as service the sale being of the food and beverages supplied and this sale is sale within the meaning of this term as defined in section 2(h) of the Central Excise Act, 1944, as made applicable to Service Tax by virtue of section 65(121) of the Finance Act, 1944. (b) In any case, the 'sale' referred to in Notification No. 12/03-ST would also cover the "deemed sale" under Article 366(29A) of the Constitution as under clause (f) of Article 366(29A) of the Constitution, "Tax on sale or purchase of goods" includes "a tax on the supply by way of or as part of service or in any other manner whatsoever of goods being food or any other article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Act, 1944, which by virtue of section 65(121) is applicable to Service Tax matters and the benefit of exemption under this notification cannot be extended to the predominant service contracts not involving 'sale' of goods primarily, as defined in section 2(h) of the Central Excise Act, 1944 misconstruing legal fiction of Article 366(29A). 6.1.2 Coming to the question as to whether there is sale of food and beverages in this case definition of the term "sale" as defined by section 2(h) of the Central Excise Act, 1944, may be examined. The word 'sale' has been defined in this section as "any transfer of possession of goods by one person to another in ordinary course of trade or business for cash or deferred payment or other valuable consideration". This definition of sale obviously involves intention for transfer of possession for some consideration. Unless such an intention for transfer of possession of goods for some consideration is discernible in a contract, the same cannot be said to be sale. When in a contract rendering of service is the predominant intention the use of goods being unintentional and unavoidable for performance of service and the performance of such s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with its customer, even if it involves catering service, is a contract of service not a contract for sale. In this regard Hon'ble Supreme Court in para 55 of its judgment in case of Tamil Nadu Kalyana Mandapan Association (supra) has observed as under :- "The services provided by a Mandap keeper are professional services which he alone by virtue of his experience has the wherewithal to provide. A customer goes to a Mandap keeper, say a star hotel, not merely for the food that they will provide but for the entire variety of services provided therein which result in providing the function to be solemnised with the required effect and ambience. Similarly the services rendered by outdoor caterers is clearly distinguishable from the service rendered in a restaurant or hotel in as much as, in the case of outdoor catering service, the food/ eatables/drinks are the choice of the person who partakes the services. He is free to choose the kind, quantum and the manner in which the food is to be served. But in case of restaurant, the customer's choice of food is limited to the menu card. Again, in the case of outdoor catering, customer is at liberty to choose the time and place where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and drinks at a specified price. The records show that the Appellant were serving food and beverages to the guests of their customers in course of providing Mandap keeper service for which they have billed the customer. These charges are the charges for catering service, not the charges for sale of food and beverages. 6.1.2.3 In view of the above discussion, we hold that there was no sale involved in the Appellant's transaction as Mandap keeper while serving their customers, for there is no sale of food and beverage as defined in section 2(h) of the Central Excise Act, 1944. When there is no sale of any materials or goods, the exemption under Notification No. 12/03-ST would not apply. This exemption notification is inapplicable to indivisible service contracts like the present one in hand. 6.1.3.1 As regard the third contention of the Appellant that value of food and beverages served in their case is more than 40% of the gross amount charged for service in relation to use of Mandap, and abatement under Notification No. 21/97-ST and its successor Notification No. 1/06-ST is 40%, abatement of actual value of food and drinks has to be allowed under Notification No. 12/03-ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of food and drink by whatever mode it may be made. It does not conceptually or otherwise includes the supply to services within the definition of sale and purchase of goods. This is particularly apparent from the following phrase contained in the said sub-article "such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods". In other words, the operative words of the said sub-article is supply of goods and it is only supply of food and drinks and other articles for human consumption that is deemed to be a sale or purchase of goods. 44. The concept of catering admittedly includes the concept of rendering service. The fact that tax on the sale of the goods involved in the said service can be levied does not mean that a service tax cannot be levied on the service aspect of catering. Mr. Mohan Parasaran, learned senior counsel for the appellant submitted that the High Court before applying the aspect theory laid down by this Court in the case of Federation of Hotel and Restaurant v. Union of India (supra) ought to have appreciated that in that matter Article 366(29A)(f) of the Constitution was not considered which is of vital importance to the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing so would amount to charging of tax on a service contract i.e., service tax by the State Governments which they cannot do. But the position is different when charging service tax on an indivisible service contract by Central Government where some goods have been used for performing the service. For charging tax on such indivisible service contract, no legal fiction is required service tax is to be charged if the service is taxable on the measure as chosen by the legislature, as it is settle law that measure of a tax is independent of the nature of the tax. The service tax can be charged on the gross amount charged for the service including the value of the goods used for providing the service. Therefore the observations of Hon'ble Supreme Court in case of Imagic Creative (P.) Ltd. (supra) that payments of service tax and VAT are mutually exclusive is in consonance with observation of the Apex Court in para 44 of its judgment in case of Tamil Nadu Kalyana Mandapam Association (supra). 6.2 It was pleaded by the Appellant that Notification No. 21/97-ST and its successor Notification 1/06-ST which are specific notifications meant for Mandap keepers have a condition that bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and water to passengers on board the trains and the same is pure sale of goods. Thus the judgment of Hon'ble Delhi High Court in case of Indian Railways Catering & Tourism Corpn. (supra) cited by the Appellants is not applicable to the facts of the present case in hand. 6.4 In view of the above, we hold that there was no sale contract in the Appellant's contract as Mandap keeper for the purpose of levy of service tax under Finance Act, 1994 and therefore exemption Notification No. 12/03-ST is not available to the Appellant. They should have paid service tax after determining their liability on the basis of Notification No. 21/97-ST and its successor Notification No. 1/06-ST if conditions of such notification are satisfied. Therefore, so far as appeal Nos. ST/374/08 and ST/399/09 is concerned, the service tax demands are correct on merits and so far as appeal No. ST/462/2010 is concerned, since in this case, even the Notification No. 1/06-ST has been denied on the ground that input service credit has been availed and since the Appellant are ready to reverse the input service credit as prayed in the course of hearing, the tax demand has to be re-determined after perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gments of Hon'ble Supreme Court in respect of section 11A(1) of the Central Excise Act, 1944 would be applicable to section 73(1) of the Finance Act, 1994 also. 7.2 In this case, the Appellant were filing the six monthly ST-3 returns and it is not the allegation of the department that availment of Notification No. 12/03-ST was not declared in the ST-3 returns. When the Department had knowledge that the Appellant are availing of exemption under Notification No. 12/03-ST since 1-3-2005, it cannot be said that the Appellant suppressed this information from the Department with intent to evade the tax. Thus the criteria for invoking the longer limitation period, as mentioned in the judgments of Hon'ble Supreme Court mentioned in para 7.1 above is not satisfied. Therefore only normal limitation period of one year from the "relevant date" would be available to the Department for recovery of short paid tax and accordingly while the service tax demands in appeal Nos. ST/399/08 and ST/462/2010 are within time, part of demand in appeal No. ST/374/08 for period prior to March 06 would be time barred. 8. It has been pleaded that since there is no wilful misstatement, fraud or suppressi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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