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TMI Blog2024 (1) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... lation to use of Mandap to their customers, which is taxable Prev) under Section 65(105) (m) read with Section 65(66) and 65 (67) of the Finance Act, 1994 (i.e., "the Act"). During the course of providing such services of Mandap Keeper" against consideration received for organizing any official, social or business function, they also provided service of flower decoration, hiring of music instruments, electronic IT product etc., and the services as a caterer as defined in Section 65(24) ibid, [i.e. they prepared and served food and beverages to the customers including their guests). 3. It was also observed by the department that the assessee was splitting the gross amount charged in relation to the services of Mandap Keeper into two parts and collected the said amount from their customers by issuing two separate invoices viz. (i) charges for Mandap and other services, if any, and (ii) charges for food and beverages. The assessee did not pay any service tax on the amount charged and collected towards food and beverages ie., catering services or 'Banquet Taxable Sale, in terms of notification no. 1/2006 - ST dated 01.03.2006 (or the period 2010-11 to 2012-13 (up to 30.06.2012) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, along with interest under Section 75 ibid. It appeared that for the acts of omission and commission and contraventions of the provisions of the Act, and Rules there under, with intent to evade payment of Service Tax, they appeared liable to penal action under Section 76 and 78 of the Act. Hence the show-cause notice dated 13.10.2015 came to be issued to the assessee. 7. The adjudicating authority after considering various submissions by the party inter alia, gave the following findings: "9. As per the allegations brought out in the show-cause notice, during the course of Audit, the auditors observed that during the period 2010-2011 to 2012-13 (Up to 30.06.2012), the Assessee had provided the service in relation to use of Mandap to their customers, which is taxable under Section 65(105) (m) read with Section 65(66) and 65 (67) of the Finance Act, 1994. In course of providing the above service by providing temporary occupation of a Mandap for a consideration for organizing any official, social or business function, they also provided service of flower decoration, hiring of music instruments, electronic-IT product etc. and services as a caterer as def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on; [Explanation-For the purposes of this clause, social function includes marriage)". Whereas, under section 65 (67) of Finance Act, 1994, the definition of "Mandap Keeper" is defined as under: "(67) "Mandap keeper" means a person who allows temporary occupation of a Mandap for consideration for organizing any official, social or business function; [Explanation. For the purposes of this clause, social function includes marriage"] Whereas, definition of taxable service of "Mandap Keeper" defined vide sub- clauses (m) of section 65 (105) Finance Act 1994 as amended is as under: "to any person, by a Mandap keeper in relation to the use of Mandap in any manner including the facilities provided or to be provided to such person in relation to such use and also the services, if any, provided or to be provided as a caterer." 10. In service provided or to be provided as a caterer in course of use of Mandap is specifically included within the purview of "Mandap Keeper Service Whereas, under Section 67 of the Finance Act, 1994 the taxable value for the service in relation to use of Mandap is the gross amount charged without any provision for abatement for the cost of food and bevera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e defense submissions of the assessee that, it has been forcefully pleaded by them that they were guided by the Board Circular No.176/1/2001-CX(4) (Pt.) dated 31.3.2004, and hence they had duly paid VAT on sale of food and full Service Tax (without abetment) on the service charges, which included hall hire, decoration etc., under the service category of Mandap keeper, since the labour component alone is subject to the levy of Service Tax. 15. In this regard, we have gone through the letter F.No. 176/1/2001CX(4) (Pt.) dated 31.3.2004, addressed to the Secretary General of Federation of Hotel & Restaurant Association of India, and issued by Shri S.K. Bhardwaj, the then Member of the Board, the scanned copy of which is reproduced herein below, for better comprehension: From the above scanned image, it can very well be seen that, it was not a circular in the manner being emphatically pleaded by the assessee, but a letter specifically issued in response to the request of Federation of Hotel Industry giving guidance in the matter. Further, vide 1st Para of the above letter, I find that it was the demand of the Federation that an abatement of 40% may be granted on the gross value of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the category of Mandap Keeper Service, whereas, major amount of Rs.7,84,56,052/- represents the gross value of "Banquet/catering charges" collected towards serving of food & beverages, but claimed as exempted from payment of Service Tax under Notn.No. 12/2013-ST. Thus, if the above amounts are converted in to percentages, it is seen that as against 95.94% of the value representing supply of food & beverages which has been claimed exempt by virtue of Notn.No.12/2003-ST, only a paltry amount representing 4.05% of the Gross value charged from the clients have been subjected to levy of Service Tax under the category of Mandap Keeper Services. .......................................... .......................................... .......................................... Hon'ble Supreme Court in case of Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi reported in (1979) 1 SCR 557 has held that serving of food or drinks by a restaurant to his customers does not partake of the character of sale of goods. Thus, the catering component of the Appellant's contract with their customer while rendering Mandap keeper service is service in which there is no objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable for the reason that field of taxation and power of taxation of Union and State is different. Different aspects of a transaction is taxed under different legislative entries. After carefully considering plea of the appellant, we are of the view that the same is devoid of merit for the following reasons: (1) Hon'ble Supreme Court in case of Tamil Nadu Kalyana Mandapam Association v. Union of India (supra) while considering the validity of levy of Service tax by the Ceniral Government on the service in relation to use of Mandap, while dismissing the argument of the Appellants that Service tax by Central Government on catering services, a part of service in relation of use of Mandap, amounts to tax on sale and purchase of goods, and upholding the levy, held that the fact that sales tax on the supply of 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. In this regard paras 42,43,44 and 45 are reproduced below 42. As far as the above point is concemed, it is well settled that for the tax to amount to a tax on sale of goods, it must amount to a sale according to the established concept of a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ederation of Hotel and Restaurant (supra) and, in particular, on the aspect theory is, therefore, apposite and should be upheld by this Court In view of this, the contention of the appellant on this aspect is not well founded 45. It is well settled that the measure of taxation cannot affect the nature of taxation and, therefore, the fact that Service tax is levied as a percentage of the gross charges for catering cannot alter or affect the legislative competence of Parliament in the matter." Thus the plea that Service tax cannot be levied on the portion of value of Mandap Keeper Service which represents the value of food and beverages served is baseless In fact in paras 42 & 43 of the Apex Court judgment reproduced above it has been held in very clear terms that Article 366(294) (D only permits the states to impose a tax on the supply of food and drinks by whatever mode it may be made and it does not conceptually or otherwise includes the supply to services within the definition of sale and purchase of goods. (2) In the case of Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes (supra), the assessee was providing "advertising Agency's service" and was pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2.1 As discussed above, serving of food and beverages for consideration to the guests of the customers in the course of use of Mandap is catering service, is not sale of food and beverages. If such a contract involves sale of food and beverages or any other goods or material, the evidence for the same has to be produced. As discussed in para 6.1.2.2 above, there was no evidence produced to show that there was a sale contract between the Appellant and its customers. 6.3 The Appellant relied on Tribunal's judgment in case of Sky Gourmet Pvt. Ltd. v. Commissioner of Service Tax, Bangalore reported on 2009/01)LCX0142 Eq 2009 (014) STR 0777 (Tri. - B * amg .) wherein it was held that in view of legal fiction of Article 366(29A)(f) of the Constitution, serving of food and beverages in c catering contract is sale of food and beverages for the purpose of Notification No. 12/03-S.T. But this judgment has not considered at all in the judgment of Hon'ble Supreme Court in case of Tamil Nadu Kalyana Mandapam Association v. Union of India (supra). In para 55 of the said judgment Hon'ble Court has held that service element is more weighty and predominant in outdoor catering and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be re-determined after permitting exemption under Notification No. 1/06-S.T. subject to condition that the Appellant reverses the Cenvat credit." 18 The A.R while reiterating order of the Commissioner as above, has also relied on the decision as reported in 2019 (26) G.S.T.L 71 (T-All.) in HOTEL KANHA SHYAM VS.COMMISSIONER OF C.EX. & S.T., ALLAHABAD and SAYAJI HOTELS LTD VS. COMMISSIONER OF C.EX., INDORE-2011 (24) STR 177 (Tri. - Del.)) 19. Appellants on the other hand, inter alia, submit that that the issue under contest is whether the Appellant has correctly discharged full Service Tax on Hall Hire Charges, when full VAT stood paid on food sale component. The revenue department on the other hand wishes to forcibly include both food and hall hire charges and compute Service Tax thereon, by granting abatement there from, under the category of Mandap Keeper Service. This is evident from Para 21 of the impugned order . 20. Though the impugned order heavily relies upon the decision in the case of Sayaji Hotels P. Ltd. 2011 (24) S.T.R. 177 (Tri. - Del.), however, a lot of water has flown under the bridge and the issue on hand is more or less settled by now, vide the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Creative P. Ltd. 2008(9) STR 337(SC) as well as in the case of Munjaal Manish Bhatt 2022(62) GSTL 262 (Guj) - Para 96 to 100 thereof, and hence, the demand therefore cannot survive anyway. 24. The Appellant had always entertained a bonafide belief in this regard based on CBIC Clarification dt. 31.3.04 regarding non-levy of Service Tax on food sale component. Even the VAT authorities have certified that the Appellant had paid applicable VAT on food sale, as a result of which, the same cannot be subjected to levy of Service Tax once again. 25. Under the facts and circumstances of the case, even if there are divergent judicial views on the issue the whole of demand being issued beyond normal period of limitation, is anyway patently time-barred. 26. They further relied upon the following decisions:- * Safety Retreading Company (P) Ltd 2017(1) TMI 1110-SC * M/s. Mohit Minerals Pvt. Ltd 2022(5) TMI 968-SC * M/s. Total Environment Building Systems Pvt. Ltd 2022(8) TMI 16 SC * M/s. Kone Elevator India Pvt. Ltd 2014(5) TMI 265-SC * M/s. Larsen & Toubro Ltd & Others 2015(8) TMI 749-SC * M/s. Ocean Interior Limited 2019 (11) TMI 124- CESTAT Chennai * M/s. Ocean I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering service to the customers. Hence, the requirements of notification 12/2003 have been duly complied with and accordingly, the service tax demand cannot be confirmed by clubbing the value of food items sold during the course of providing "mandap keeper service". Therefore, we are of the view that the appellant should be entitled for benefit of notification 12/2003 - ST We find that this Tribunal in the appellant's own case vide Final Order No. 56060/2016 dated 23.12.2016 has allowed the benefit of notification no. 12/2003 - ST 5. In view of above, we do not find any merits in the impugned order. Accordingly, the same is set aside and the appeals are allowed in favour of the appellant". 26.2 We find that the above decision is in consonance with the legal position in this case. We also find that not only the supply of food has been segregated but also appellants have discharged VAT tax on such food component and have also paid service Tax on Mandap keeper charges extracted from the parties and paid service tax on it. The constraint of separate contract emphasized in impugned order remains of no legal consequence, when supplier of service and service receiver indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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