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TMI Blog2001 (7) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... n 66 of the Finance Act, 1994 is a charging section. Few other provisions would be necessary to be seen. Section 65(16) as it stood then defined the "taxable service" while, Sec. 67 provides for the manner in which the "taxable service" was to be valued for charging the service tax. It also provided that every person responsible for collecting the service tax under Chapter V shall within such time and in such manner and in such form as may be prescribed make an application for registration under this Chapter to the Central Excise Officer. Section 70 provided that every person responsible for collecting the service tax shall furnish or cause to be furnished to the Central Excise Officer in the prescribed form and verified in the prescribed manner a quarterly return within fifteen days of the end of the preceding quarter giving various particulars required under the said provision. This Finance Act was substantially amended by Finance Act, 1997 and number of other services were brought into the tax dragnet. Section 65(8) defined the term "caterer" as follows : "Caterer means any person who supplies, either directly or indirectly, any food, edible preparations, alcoholic or no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Finance Act No. 2/98 which was brought into with effect from 16-10-1998. However, the services provided by the outdoor caterer, who was defined under Sec. 65(24) came to be deleted form the list of "taxable services". In the amended Act Sec. 65(48) defined the term "taxable services" whereas in the earlier Act those services were defined under Sec. 65(41) and the services provided by the outdoor caterer was defined by Sec. 65(41)(n). Both those provisions, viz. Sec. 65(24) and Sec. 65(41)(n) were deleted. With the result, the said services remained taxable only during the period when the earlier Act was in force. Thus, the period during which the said tax remained on the statute book is only between July, 1997 and July, 1998. We are thus left with only the challenge to the constitutionality of the provisions regarding the mandap keeper and the outdoor caterer. 4. Before we proceed to consider the challenge to these provisions, we must observe that we have dismissed the challenge to the constitutionality of Sec. 65(22) and Sec. 65(48)(m). We have already pointed out that these two provisions came in place of the provisions of Section 65(19) and Sec. 65(41)(p) of the unamende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which would also include the charges for food, edible preparations, alcoholic or non-alcoholic beverages, etc. The learned Counsel, therefore, points out that this service would include the sale of food, edible preparations, alcoholic or non-alcoholic beverages, etc. To buttress his contention, the learned Counsel further invites our attention to Art. 366(29A) and points out that a tax on the sale or purchase of goods includes a tax on the supply by way of or as a part of any service or in any other manner whatsoever of food or any other article for human consumption or any drink whether toxicated or intoxicated, whether such supply of service is for cash or deferred payment or for other valuable consideration. The learned Counsel points out that under sub-clause (f) of Art. 366(29A) it is further provided that such transfer, delivery or supply and purchase of these goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and purchase of these goods by the person to whom such transfer, delivery or supply is made. The learned Counsel, therefore, argues very vehemently that any supply made by the outdoor caterer of the food or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... catering. The argument before us in that batch of writ petition was that even in providing the services to the client by a mandap keeper, the mandap keeper was effecting the sale of food articles. An identical argument was addressed before us on the aspect of the legislative competence with reference to Art. 366(29A)(f) and also Entry 54. In paragraphs 28, 29, 30, 31, 32, 33, 34, 35, 36, and 37 we have dealt with this aspect and held that the said tax was more particularly relatable to the aspect of services offered by the mandap keeper and not a mere sale of goods. In coming to that conclusion we have relied upon the celebrated decision of the Apex Court in Federation of Hotels and Restaurants v. Union of India (AIR 1990 SC 1637) and found that while dealing with the identical question regarding the "expenditure tax", the Supreme Court had held that the tax levied could not be said to be relatable to sale of goods but was relatable to expenditure alone. While addressing the history of the constitutional amendment which introduced Art. 366(29A)(f), we have also considered the earlier decided cases reported in 1972 STC 113 and AIR 1978 SC 1591. We have also rejected the content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 accountrements provided to such client for any purpose or on any occasion." The language with Sec. 65 as it stood then, which is the impugned provision now and Sec. 65(1) (post amendment) which we have considered in W.P. No. 1617 of 1999 and batch of writ petitions is strikingly similar. We have also taken the stock of the earlier decided cases as also the later judgments of the Supreme Court reported in 2001 (1) SCC 521. We have no doubt that the judgment of ours in W.P. No. 1617 of 1991, etc. would clinch the issue in the present case also. We are, therefore, of the clear opinion that the present impugned provisions cannot be attributed to Entry 54 of List II (State List) and, therefore, it cannot be said that there is lack of legislative competence in respect of the impugned provisions. 8. The learned Counsel again harped on the aforementioned decisions of the Northern India Caterers and Associated Hotels. However, for the reasons that we have given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax dragnet of the service tax. The argument is, therefore, rejected. 10. The learned Counsel further argued that in the first place the Parliament was not competent to include the value of food stuffs and drinks supplied for the purpose of service tax at all. The further argument was that even if that was so, the entire transaction of providing the facilities or amenities and the supply of eatables, drinks, etc. was considered as a single item for taxable service flowing out of a single item for taxable service flowing out of a single contract. The arguments was that therefore the tax has become unreasonable and arbitrary. We do not at all agree. As to on what items should the legislature impose a tax is for the legislature to decide. In fact, it is a wide "discretion" on the part of the legislature and the Courts have always recognised such "discretion" in the legislature. In the aforementioned judgment of Tamil Nadu Kalyana Mandapam Owners' Association , we have negatived the challenge to the provisions regarding "mandap keeper", viz. Sec. 65(48)(m) and 67(1) under Art. 14 of the Constitution of India. In paragraph 42 of that judgment we have dealt with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was to be taxed and which not to be taxed. We do not think that there is any such deformity. The provisions are clear that the gross charges are to be taken into consideration while assessing the service tax. In our opinion, there is no vagueness. We took the same view in the aforementioned Tamil Nadu Kalyana Mandapam Owners' Association case. We have pointed out that the charge which has to be paid by the assessee is to be fully covered by the gross charge in respect of the services provided. In our view, there would be no arbitrariness on this account. 12. A feeble argument was then addressed that while the hoteliers who were providing the indoor service were not being taxed while relatively weaker section of the persons who go out and offer the catering services were being taxed. The learned Counsel argued that if a person has a restaurant on Marina beach, he may not be taxed while a person who offers the service under the sky would be liable to be taxed and that is arbitrary. In our opinion, this is not the situation. We have already explained that it is open to the legislature to select the items and areas to be taxed. It is the legislature's discretion and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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