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TMI Blog2024 (3) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... not change in view of the definition of service under section 65B(44) of the Finance Act and the provisions of article 366(29A) of the Constitution. This is also clear from the Education Guide issued by CBEC on 19.06.2012. Paragraph 2.6.4 clarifies the reason for deletion of the notification dated 20.06.2003. It would also be pertinent to refer to the decision of the Tribunal in HALDIRAM MARKETING PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS AND SERVICE TAX, GST DELHI EAST COMMISSIONERATE, NEW DELHI [ 2023 (2) TMI 783 - CESTAT NEW DELHI] . The Division Bench held that activities of preparation of food items by engaging chefs, packaging and delivery and selling them as take-away food items over the counters would amount to sale and, therefore, not be leviable to service tax. In INDIAN RAILWAYS CATERING TOURISM CORPORATION LTD VERSUS GOVT OF NCT OF DELHI ORS [ 2010 (7) TMI 174 - HIGH COURT OF DELHI] , the Delhi High Court examined whether service tax could be leviable on foods and beverages supplied on board the trains and it was held that the transaction between the petitioner-company and Indian Railways for providing food and beverages to the passengers, on board the trains, is a t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her article for human consumption or any drink, are supplied in any manner as a part of the activity. The show cause notice, therefore, alleges that the activity performed by the respondent would be covered as a declared service under section 66E of the Finance Act. The show cause notice also mentions that the respondent also provided ancillary service, such as, handling and transportation service, but these two services would be considered as bundled service, with catering service being the main service. 5. The respondent filed a reply to the show cause notice and denied the allegations made therein. The respondent contended that the supply of food and beverages to the airlines cannot be treated as a declared service under section 66 of the Finance Act. The respondent also contended that it had raised separate invoices for each of the services and for sale of food and beverages. Sales Tax/VAT was paid for sale of food and beverages and service tax was paid for provision of transportation and handling charges,. 6. The Commissioner, by order dated 31.01.2018, dropped the proceedings holding that the respondent had not provided any service in relation to supply of food and the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) of the Finance Act would be applicable in the present case and in this connection recorded the following findings: 20.6 The revenue has also alleged that the Noticee is supplying food as per the order of their clients. I find that ordering relates to the quantity required and it will not affect the nature of transaction. The sale transaction would remain sale transaction and would not become a service only because it is done on order of client. Therefore, I find that preparation of food as per the order of the clients is not a service and would not be covered under entry (i) of section 66E of the Finance Act, 1994 as amended. (emphasis supplied) 9. The Commissioner also examined whether rule 2C of the Service Tax (Determination of Value) Rules, 2006 would have any application in the present case, and in this connection recorded the following findings: 21.1 As discussed above, I find that as per section 66E (i) of the Finance Act, 1994, only service portion in supply of food is leviable to service tax. In case of composite activity which involve both supply of goods and provision of service, the service portion need to be ascertained to levy the service tax on such service port ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service and that the respondent paid sales tax on the supply of food to airlines, and service tax on transportation, handling and laundry charges. Learned consultant pointed out that the contract was clearly divisible and that section 65B (44) of the Finance Act defines service to mean any activity carried out by a person for another for consideration, and includes a declared service, but would not include transfer, delivery or supply of any goods, which is deemed to be a sale within the meaning of clause 29(A) of article 366 of the Constitution. 12. The submissions advanced by the learned authorized representative appearing for the department and the learned consultant for the respondent have been considered. 13. Service tax was imposed on outdoor catering services w.e.f. 10.09.2004. Section 65(76a) of the Finance Act defined an outdoor caterer to mean a caterer engaged in providing services in connection with catering at the place other than his own but including a place provided by way of tenancy or otherwise by the person receiving such services. This service was made taxable under section 65(105)(zzt) of the Finance Act. This section provides that taxable service would mean a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12/2003-S.T. is available to all the services. There is an exclusion of the value of the goods sold during their rendering of service. In this lease, it is very clear in view of the separate invoices raised that the food/beverages supplied have been separately paid for. There is documentary evidence for the cost of such goods sold during their rendering of service. In view of the Article 366(29A) read with provisions of the Karnataka VAT Act, 2005, it is very clear that in this Outdoor Catering Service , the food supplied should be treated as sale of goods and for the sale of goods, VAT has already been paid. Therefore this cannot be charged to the service tax in view of the ratio of the Supreme Court s decision in M/s. BSNL case. Further the benefit of Notification No. 12/2003-S.T. is squarely applicable in this case and the Commissioner has simply brushed aside. We are also in agreement that the appellant s contention that when two notifications are available, it is the appellant always has an option to choose a more beneficial Notification. There is no reason why the benefit of Notification No. 12/2003 is not available to the appellants. In these circumstances, we do not find mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale aspect only namely, the value of the food articles. 7. The Division Bench held that outdoor catering consists of goods namely, the articles of food etc., which would constitute sale. Hence, the value of the food articles are liable for sales tax which the State Government is liable to impose. The other part of outdoor catering is the service rendered by the assessee in bringing the food articles to a place designated by the client. The service so rendered by the assessee, which also includes the cost of transporting the food articles constitutes service. Therefore, to this extent alone, the assessee is liable for service tax and for the entire cost received from the Airlines. Hence, there has to be a bifurcation with regard to the sale of goods and the service provided. However, it does not empower the State Government to levy tax on the entire amount mentioned in the bill. The entire sale price includes the transportation charges also and out of that sale price what is the service aspect and what is the sale aspect requires to be decided by the authorities. It is only thereafter that sales tax could be imposed on the cost of the food articles arrived at and the remaining exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it is reproduced below: 2.6.4 Why has Notification 12/2003-S.T. been deleted? Notification 12/2003-S.T. exempted so much of the value of all taxable services as was equal to the value of goods and materials sold (emphasis supplied) by the service provider to the service recipient subject to condition that there is documentary proof of such value of goods and materials . This was necessary under the regime of taxation of services based on specified descriptions as some of the specified descriptions could include an element of transfer of title in goods. On the other hand, under the negative list scheme, specified descriptions of taxable services have been done away with and transactions that involve transfer of title in goods or are deemed to be sale of goods under the Constitution are excluded from the ambit of service by the very definition of service . Therefore if, in the course of providing a service, goods are also being sold by a service provider for which there is such documentary proof as to make the sale a distinct and a separate transaction then the activity of sale of such goods gets excluded from the definition of service itself. The essence and intent of Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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