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TMI Blog2023 (12) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... Gold Class Screens and Director's Cuts. The appellant along with the activity of screening of movies has also provided for the facility of sale of food and beverages over the counters/stalls set up by them in the common lobby of the multiplexes. 3. An investigation was conducted by the Directorate General of Goods and Service Tax Intelligence (hereinafter referred to as "DGGSTI") and it was observed that the appellant has failed to pay due service tax on the activity of sale of food and beverages. Accordingly, show cause notice dated 13.10.2014 for the period 2013-2014 and also another show cause notice dated 15.10.2015 for the period 2014-2015 involving demand of Rs.10,26,97,058/- + Rs. 14,64,87,052/- = Rs.24,91,84,110/- on the ground that the service portion in the supply of food and beverages by the appellant from its air-conditioned establishment/outlets is a taxable service w.e.f. 01.04.2013 and also as per Rule 2C of the Service Tax (Determination of Value) Rules, 2006, the value of service portion involved in the supply of food and beverages is 40% of the total amount charged for the said supply. On adjudication, the demand under the said two show cause notices was confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating ) is supplied in any manner as a part of the activity". The definition of 'Service", provides an exclusion clause whereby transfer of title in goods or immovable property by way of sale is not service. Consequently, the declared service has to be understood and interpreted in light thereof. Therefore, the Revenue by way of Circulars clarified that service tax shall not be leviable where the transaction amounts to sale of goods. The first circular we need to take note of is the Circular dated 24.9.1997, which clarified that delivery of food where there is no dining and service extended, would not be subject to service tax and subsequently the Circular dated 10.09.2004 clarified that free home delivery of food by hotels and restaurants would not be subject to service tax. Further, Circular No. 96/7/2007 dated 23.8.2007 provided as : "Service is not leviable on a transaction treated as sale of goods and subjected to levy of sales tax/VAT. Service Tax is not leviable on a transaction treated as sale of goods and whether a given transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016(9) TMI 430, where also the appellant was engaged in providing mid-day meals to various schools, set aside the order whereby the demand of service tax liability was affirmed by the authorities below on supply of mid-day meals. The decision of the Telangana High Court in M/s Bhimas Hotels Pvt Ltd Vs. Union of India - 2017-TIOL-799-HC-APST considered the issue whether the food supplied by an employer to the workers at a subsidised rate would come within the meaning of the expression 'service', irrespective of whether the food is supplied within the premises or outside the premises, observed once the activity undertaken by the petitioner in the form of supply of food to its workers at the subsidised rate is concerned to be part of the industrial obligation, it is unthinkable, the same can be construed as a service falling within the definition of the expression 'service' under section 65B (44) of the Finance Act. Once again, in the case of M/s Hotel Priya Vs. Commissioner of G.S. & Central Excise, Chennai, 2018 (9) TMI 1663, the Tribunal following the decision in M/s Ambedkar Institute of Hotel Management (supra) upheld the contention of the appellant that service element in 'outd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir absence. In most restaurants, there is a separate counter for collection of the take-away food parcels. Orders are received either over telephone, by e-mail, online booking or through a food delivery service such as swiggy or zomato. 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. In the aforesaid circumstances, I am of the categoric view that 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." 9. The above paragraphs have been reiterated later by the Ahmedabad Bench of the Tribunal in Hotel Utsav V CCE & ST, Surat, 2022 (3) TMI 329. Lastly, we would take note of the latest decision of the Principal Bench of the Tribunal in the case of Haldirams Marketing Pvt Ltd Vs. Commissioner, Central Goods and Service Tax, GST Delhi Commissionerate, New Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ican Jurisprudence sets(3) forth the statement of the law in that regard, but we may go to the case itself, Electa B. Merrill v. James W. Hodson(4), from which the (1) Innkeepers & Hotels, para 169. (2) 4 Burr. 2065. (3) Vol. 46 p. 207 para 13. (4) 1915-B L.R.A. 481. statement has been derived. Holding that the supply of food or drink to customers did not partake-of the character of a sale of goods, the Court commented:- "The essence of it is not an agreement for the transfer of the general property of the food or drink placed at the command of the customer for the satisfaction of his desires, or actually appropriated by him in the process of appeasing his appetite or thirst. The customer does not become the owner of the food set before him, or of that portion which is carved for his use, or of that which finds a place upon his plate, or in side dishes set about it. No designated portion becomes his. He is privileged to eat, and that is all. The uneaten food is not his. He cannot do what he pleases with it. That which is set before him or placed at his command is provided to enable him to satisfy his immediate wants, and for no other purpose. He may satisfy those wants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dosas. You may have the cake and eat it too, like a child which bites a part and tells daddy that he would eat the rest at home. Myriad situations, where the transaction is a sale of a meal, or item to eat or part of a package of service plus must not be governed by standard rule. In mere restaurants and non-residential hotels, many of these transactions are sales and taxable. Nor are additional services invariably components of what you pay for. You may go to an air-conditioned cloth-shop or sweetmeat store or handcrafts emporium where cups of tea may be given, dainty damsels may serve or sensuous magazines kept for reading. They are devices to attract customers who buy the commodity and the price paid is taxable as sale. The substance of the transaction, the dominant object, the life-style and other telling factors must determine whether the apparent vendor did sell the goods or only supply a package of services. Was there a right to take away any eatable served, whether it be bad manners to do so or not? In the case we have, the decision went on the ground that such right was absent. In cases where such a negative is not made out by the dealer-and in India, by and large, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a complex, their main purpose is to enable the public to view the movie, however to make it more enjoyable and convenient they provide a separate counter outside the movie hall but within the complex where the viewers can themselves go and buy some food or drinks, which implies that the later facility is only incidental and hence cannot be treated as a service within the definition of "service" under the Finance Act, for the charge of service tax. In this regard, we would like to take note of the decision of the Delhi High Court in Indian Railways C. & T. Corpn. Ltd. Vs. Govt. of NCT of Delhi -2010 (20) STR 437 (Delhi), where the petitioner, a Government company was providing services, including catering on board the trains run by Indian Railways and the Court observed:- "46. Since there is transfer of goods, by the petitioner company to Indian Railways, for consideration and the property in the goods also passes to Indian Railways, the transactions between them is no doubt a case purely of sale of goods under the provisions of Sale of Goods Acts as well as Delhi Value Added Tax Act and the element of service by way of heating the food, heating/ freezing the beverages and then se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the waiters come and collect the crockery back. This kind of facility is not provided in case of other category of viewers with which we are concerned here and that is the distinguishing feature on which the PVR pays the service tax. The analogy adopted by the earlier Benches of the Tribunal as well as by the High Courts and the clarifications issued by the revenue by way of circulars which are binding on them, will squarely cover the present case. We, therefore are of the firm view that the service tax is not leviable on the sale of food items in packed form or by process of reheating in the cinema halls as there is no element of service involved therein. 16. The learned Authorised Representative has referred to an advance ruling in the case of In Re HRPL Restaurants Pvt. Ltd. - (2023) 4 Centax 410, where it was held that when ice creams ordered are supplied along with cooked or prepared food through restaurant outlets, then supply would assume character of composite supply, classifiable under 'restaurant service' with GST leviable at 5%. We are not swayed by the relied on order for the simple reason that the same has no precedential value in case of another party. 17. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X
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