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TMI Blog2021 (6) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... ried waiters and the use of fine crockery and cutlery, among others. The provision of the aforesaid niceties are critical to the determination as to whether the establishment in question would attract liability to service tax, and that too, only in an air-conditioned restaurant - In the case of take-away or food parcels, the aforesaid attributes are conspicuous by their absence. In most restaurants, there is a separate counter for collection of the take-away food parcels. Once processed and readied for delivery, the parcels are brought to a separate counter and are picked up either by the customer or a delivery service. More often than not, the take-away counters are positioned away from the main dining area that may or may not be air-conditioned. In any event, the consumption of the food and drink is not in the premises of the restaurant - the provision of food and drink to be taken-away in parcels by restaurants tantamount to the sale of food and drink and does not attract service tax under the Act. Petition allowed - decided in favor of petitioner. - W.P. Nos.13469 of 2020, 28789 & 28095 of 2019 and 1748 & 5935 of 2021 And WMP. Nos. 16637 of 2020, 28539, 27715 of 2019, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer of title in goods by way of sale. In the light of this exclusion, parcel sales or take away food would stand outside the ambit of service tax. 6. According to them, in parcel sales, there could be no artificial splitting of transactions between one of service and one of sale with the attempt to bring the same under the purview of the former. The petitioners rely on letter bearing No.DOF 334/3/2011-TRU dated 28.02.2011 which had, according to them, clarified that service tax is not intended to cover sale of food that is collected or picked up for consumption elsewhere. 7. Restaurant service, by definition means that all attributes of a restaurant such as organised seating, air-conditioning, service at the table, live music and enhanced hospitality are included. These attributes are absent in a transaction of take-away. In fact, service tax on restaurant services have itself been restricted only to service in air-conditioned restaurants. 8. The petitioners rely on the judgment of the Supreme Court in the case of (2018 (359) ELT 97 Federation of Hotel and Restaurant Associations of India V. Union of India , wherein the federation had sought a declaration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Restaurant Association V. Union of India, wherein the Court holds that restaurants primarily provide service and the sale undertaken in the course of rendition of service, is only incidental. Thus, according to the revenue, the provision of take-away food and drinks involves the rendition of service and the mode of sale, that is, by parcels, has no bearing in the matter. The transaction in question should thus be bifurcated into one that involves both the components of sale and service and brought to tax accordingly. 13. In response, the petitioners rely upon the judgments of the Supreme Court in the case of 2000 (1) SCC 521 K.Damodarasamy Naidu and Bros. V. State of Tamil Nadu and another , (1972) 29 STC 474 State of Himachal Pradesh V. Associated Hotels of India Ltd. a nd (1978) 4 SCC 36 Northern India Caterers (India) Ltd. V. Lt. Governor of Delhi , to oppose the argument advanced by the learned counsel for the respondents that one should envisage an artificial split between the activity of service and the activity of sale in a transaction of take away . 14. A Division Bench of the Chhattisgarh High Court in 2014 (35) STR 433 (DB-chatt) Hot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an efficacious alternate remedy being available. 19. This ground, though referred to, is not very seriously pursued and rightly so, seeing as the issue involved does not bring into play any disputed facts but only a pure question of law on the taxability or otherwise of a particular transaction. The argument of maintainability is thus rejected. 20. Levy of tax on service was under Finance Act, 1994 and the Legislative competence to levy a tax on service involved in the sale of food and drink is no longer res integra as held by the Supreme Court in the case of Federation of Hotels (supra footnote 11). Though initially there was some uncertainty on the quantum of the receipts that would attract tax, in time, an abatement was provided for, in recognition of the position that the sale of food and beverages and drinks (including sale of beverages and intoxicating drinks) does involve both aspects of sale as well as service. 21. Service tax was initially levied on the sale of food and drink in all restaurants without exception and Entry 19 of Notification 25 of 2012 levied tax on services provided in relation to serving of food and beverages by a restaurant, eating joint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Doubts Clarifications 1 In a complex where air conditioned as well as non-air conditioned restaurants are operational but food is sourced from the common kitchen, will service tax arise in the non-air conditioned restaurant? Services provided in relation to serving of food or beverages by a restaurant, eating joint or mess, having the facility of air conditioning or central air heating in any part of the establishment, at any time during the year (hereinafter referred as specified restaurant ) attracts service tax. In a complex, if there is more than one restaurant, which are clearly demarcated and separately named but food is sourced from a common kitchen, only the service provided in the specified restaurant is liable to service tax and service provided in a non air-conditioned or non centrally air- heated restaurant will not be liable to service tax. In such cases, service provided in the non air-conditioned / non-centrally air-heated restaurant will be treated as exempted service and credit entitlement will be as per the Cenvat Credit Rules. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This amount is meant to be shared amongst the staff who attend the customers. Though this amount is exclusively for the services it does not represent the full of value of all services rendered by the restaurants. 1.4. The new levy is directed at services provided by high-end restaurants that are air-conditioned and have license to serve liquor. Such restaurants provide conditions and ambience in a manner that service provided may assume predominance over the food in many situations. It should not be confused with mere sale of food at any eating house, where such services are materially absent or so minimal that is will be difficult to establish that any service in any meaningful way is being provided. 1.5. It is not necessary that the facility of air-conditioning is available round the year. If the facility is available at any time during the financial year the conditions for the levy shall be met. 1.6. The levy is intended to be confined to the value of services contained in the composite contract and shall not cover either the meal portion in the composite contract or mere sale of food by way of pick-up or home delivery, as also goods sold at MRP. Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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