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TMI Blog2019 (6) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... n Clause (C) wherein it is stated that services provided in relation to outdoor catering are excluded when such services are used primarily for personal use or consumption of any employee. In the case of M/s. Wipro Ltd. [2018 (4) TMI 149 - CESTAT BANGALORE] , the Larger Bench took the view that after 01.04.2011, Outdoor Catering Services were excluded from the definition of input services - Though I am persuaded by the arguments that food supply services to a factory under the Factories Act cannot be considered as services for personal consumption of employees, I am bound by the decision of the Larger Bench of the Tribunal in the case of M/s. Wipro Ltd. - credit is ineligible Penalties - HELD THAT:- The situation being interpretational one, the penalties imposed are unwarranted - penalties set aside. The impugned orders are modified to the extent of setting aside the penalties imposed without disturbing the demand or interest thereon - appeal allowed in part. - Excise Appeal No. 41631 - 41634 of 2018 and Excise Appeal No. 42225/2018, Excise Appeal No. 42227/2018, Excise Appeal No. 42228/2018 - FINAL ORDER NOS. 40858-40864 /2019 - Dated:- 24-6-2019 - MS. SULEKHA B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (B) specified in sub-clauses (d), (o), (zo) and (zzzzj) of clause (105) of section 65 of the Finance Act, in so far as they relate to a motor vehicle except when used for the provision of taxable services for which the credit on motor vehicle is available as capital goods; or (C ) such as those provided in relation to outdoor catering , beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee. (Emphasis supplied) 2.1.2 The authorities below have disallowed the credit availed on Outdoor Catering Services stating the reason that these services are for personal consumption and excluded as per the definition of input service . It is argued by the Ld. Counsels that only services which are availed for personal use are exempted. In the present case, the food supply/catering service is done in the premises of the factory by the service provider, as mandated in the Factories Act. These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f tenancy or otherwise by the person receiving such services. As per the above definition of outdoor caterer , the contractors appointed by the appellant to prepare and serve food in their factory canteens would be outdoor caterers as they are engaged in providing services in connection with catering at a place other than their own, i.e., at the appellant s premises and hence the services provided by them would be a taxable service as defined under Section 65 (105) (zzt) of the Act. 2.1.4 With effect from 01.04.2011, the definition of input service under Rule 2 (l) of CCR, 2004 has been amended, which has been reproduced earlier. The pre-amended definition is reproduced below. input service means any service, - (i) used by a provider of taxable service for providing an output service, or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench holding that canteen services in all circumstances would only be for personal consumption of the employees, is not in tune with the plain language of the exclusion clause. While qualifying the entitlement for credit, the rule makers have in their wisdom disallowed credit only when such services are for personal use of the employees. While laying down so, they also recognized that there may be instances where such services are not primarily for personal use of the employees. But if the view of Larger Bench is accepted, then there is no rationale for such qualification in the exclusion clause. If even providing canteen facility as per the requirements of the Factories Act can be considered as for personal use, then such catering services would never be eligible for credit, thereby rendering the requirement of being primarily for personal use, as redundant. In this connection, reliance is placed on the decision of the Hon ble Supreme Court in Union of India Vs. Hansoli Devi Ors. in Civil Appeal No. 9477 of 1994 dated 12.09.2002 wherein it has been observed, In Quebec Railway, Light Heat and Power Co. v. Vandray, AIR (1920) PC 181, it had been observed that the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the existing exemptions into a revised notification. In terms of number of pages, the law will be shorter by nearly 40 per cent. 2.2.4 It may be noted from the above that the new service tax regime from 01.07.2012 is completely based on a new concept and international practices. The ad hoc approach of taxing services selectively, by defining each and every service separately, is a thing of the past and hence the definitions of such individual services, which are in vogue up to 30.06.2012 are not at all relevant to understand scope service tax levy from 01.07.2012. Hence, the definition of outdoor caterer under Section 65 (76a) of the Act, which ceases to have effect from 01.07.2012 is not at all relevant to understand the scope of the term outdoor catering used in the definition of input service for the period post 01.07.2012. 2.3.1 The demands in this case pertain to the period after introduction of negative list based levy of service tax, i.e. after 01.07.2012. The individual definition of taxable services are no more in vogue from this date and section 65 of the Act ceased to have any effect from 01.07.2012. As a consequence, the definition of the term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanatory Notes therefor, which are appended below : ***99 Non-metallic minerals and other products n.e.c. Division 63 Accommodation, food and beverage services 631 Accommodation services for visitors 6311 Room or unit accommodation services for visitors 63111 Room or unit accommodation services for visitors, 63111 5510 with daily housekeeping services 63112 Room or unit accommodation services for visitors, 63112 5510 without daily housekeeping services 63113 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63391 Event catering services 63391 5621 63392 Contract food services for transportation operators 63392 5629 63393 Other contract food services 63393 5629 63399 Other food serving services 63399 5610 634 Beverage serving services 6340 63400 Beverage serving services 63400 5630 6339 Event catering and other food serving services 63391 Event catering services This subclass includes: - food preparation and supply services based on contractual arrangements with the customer, at institutional, governmental, commercial, industrial or residential premises or location/s specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncept papers on Negative List based levy of service tax, published by the Government can be noted in this regard. 80 Group 99633 Food, edible preparations, alcoholic and non-alcoholic beverages serving services 81 996331 Services provided by restaurants, cafes and similar eating facilities including takeaway services, room services and door delivery of food 82 996332 Services provided by Hotels, Inn, Guest House, Club and the like including room services, takeaway services and door delivery of food 83 996333 Services provided in canteen and other similar establishments 84 996334 Catering Services in exhibition halls, events, marria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oor Catering Services after 01.07.2012. In the present case, the disputed period is entirely after 01.07.2012. The definition of input service underwent an amendment with effect from 01.04.2011, which has already been reproduced in the contentions of the appellant as above. In Clause (A) of the said exclusions, it does not mention Sub-Clause (zzt) which is for taxable services provided under Outdoor Catering Services. The Ld. Counsels are correct in their assertion that the specific exclusion contained in Clause (A) does not take within its ambit the Outdoor Catering Services. 5.2 However, the exclusion is brought forth in Clause (C) wherein it is stated that services provided in relation to outdoor catering are excluded when such services are used primarily for personal use or consumption of any employee. In M/s. Hindustan Coca Cola Beverages Pvt. Ltd. Vs. C.C.E., Hyderabad-I reported in 2017 (49) S.T.R. 88 (Tri. Hyd.) the application of this exclusion clause was analyzed by the Single Member decision, which is reproduced as under : 6. In Circular No. 334/3/2011-TRU, dated 28-2-2011, the Board has discussed the highlights of the changes brought forth b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Act and therefore, it was more proximate or more important for the manufacturer to avail the services. 5.3 The Single Member Bench of the Tribunal later in M/s. AET Laboratories Pvt. Ltd. Vs. C.C.E., Cus. S.T., Hyderabad-I reported in 2016 (42) S.T.R. 720 (Tri. Bang.) had taken the view that Sub-Clause (C) of the definition of input service excludes Outdoor Catering Services from its ambit. 5.4 The two conflicting judgements were then referred to the Larger Bench of the Tribunal and thereafter, in the case of M/s. Wipro Ltd. (supra), the Larger Bench took the view that after 01.04.2011, Outdoor Catering Services were excluded from the definition of input services. The relevant paragraph is reproduced as under : 7.1 Further, we find that there is no dispute about the fact that all these disputes relates to post 2011. The period involved in the present appeals is admittedly after 2011 and the amendment to the provisions of Rule 2(l) defining the input service came into effect from 1-4-2011 only. The definition of input service post amendment contains exclusion clause. The exclusion clause was effective from 1-4-2011 and clause (C) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... catering service is not eligible for input service credit post amendment dated 1-4-2011 vide Notification No. 3/2011, dated 1-3-2011. 8. The reference is answered accordingly. 9. With the above observations, we revert the matter to the regular Bench for deciding the respective appeals. 6.1 Today when the matter came up for hearing, Ld. Counsels for appellants stressed on their argument that the Larger Bench decision did not take note of the change of law after 01.07.2012 and has confined to the exclusion contained in Clause (C) of the definition of input service . It is pointed that after 01.07.2012, the definition with respect to specific categories of services has been done away with. All services are taxable unless they fall within the negative list. This being so, there is no definition as such for catering services provided outside the premises of the service provider. 6.2 They have also taken efforts to draw my attention to the Budget Speech of 2011 wherein it is stated that the amendment of 2012 doing away with the separate categories of services is a step towards G.S.T. Appellants have provided services classified under G.S.T. wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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