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TMI Blog2025 (4) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... n scrutiny of the appellant's documents noticed that the appellant provided ODC to several institutional customers as per agreements that required the appellant to provide such services to the employees/staff of these institutional customers at their canteen/premises at agreed upon rates. It was further noticed that in the bills raised by the appellant in respect of these services provided to the institutional customers, the bill amount was divided into cost of materials and cost of services. The consideration under 'cost of services' alone was assessed to service tax. On further examination, it was noticed that the 'cost of materials' were the costs of ingredients like rice, flour, grams, oil, sugar, vegetables that were used in the preparation of food items/beverages/snacks and the appellant had treated these as "sale" and sought to exclude its value in terms of notification No. 12/2003-ST dated 20.06.2003. It was also noticed that in respect of customers other than these institutional customers, the appellant was claiming the conditional exemption under Notification No.1/2006-ST dated 01.03.2006, which exempted service tax as in excess of service tax calculated on a value equiva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant had paid the requisite VAT on the goods/raw materials used for preparing the food and to render the said service and such payment has not been disputed in these proceedings. In fact, he contends, the proof is available through each invoice raised on the clients, which were examined by the audit officers and which indicate separately the value of services and the value of materials/goods used as well as the respective service tax and VAT separately. It is his submission that they are able to clearly differentiate between the cost of the goods and the cost of the services and further the clients also sought invoicing in this divisible manner and this has also been averred in their reply to SCN. He also submitted that the extended period of limitation is not invokable as neither any evidence of willful misstatement with intent to evade payment of tax is forthcoming in the notice issued, nor does the notice allege willful misstatement or suppression of facts with intent to evade payment of duty. Thus, the onus of substantiating the invocation of extended period has not been discharged by the Department. He further submits that from the ST-3 returns filed it can be seen that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means any person who supplies, either directly or indirectly, any food, edible preparations, alcoholic or non-alcoholic beverages or crockery and similar articles or accoutrements for any purpose of occasion; (76a) "outdoor caterer" means a caterer engaged in providing services in connection with catering at a place other than his own but including a place provided by way of tenancy or otherwise by the person receiving such services. (105) "taxable service" means any service provided or to be provided, (zzt) to any person, by an outdoor caterer; 12. We have perused both the notifications that arise for consideration. Notification 12/2003-ST dated 20-06-2003 is as under: Valuation (Service Tax) - Goods and materials sold by service provider to recipient of service- Value thereof, exempted In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts so much of the value of all the taxable services, as is equal to the value of goods and materials sold by the service provider to the recipient of service, from the service tax leviable there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression "food" means a substantial and satisfying meal and the expression "catering service" shall be construed accordingly. [Notification No. 1/2006-S.T., dated 1-3-2006] (emphasis supplied) 14. We note that the Notification No.1/2006 dated 01-03-2006, which is a conditional notification, stipulates as one of the conditions that the said notification shall not apply "in cases where" the service provider has availed the benefit under the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2003-Service Tax, dated the 20th June, 2003. 15. This stipulation, to our mind, makes it clear that if the service provider has availed the notification No.12/2003-ST, then the notification 1/2006-ST will not apply in such cases. The application of the notification 1/2006-ST is sought to be excluded "in cases" and the said notification No.1/2006-ST does not prohibit the availment of the said notification if the service provider limits such availment to cases other than when notification No.1/2006 has been availed. We have also not been shown any provision in law that mandates that if a specific notification is issued, then it would be to the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such composite transaction that has been brought within the fiction of a deemed sale by virtue of Article 366(29A) so as to be exigible to sales tax. Further, a coordinate bench of this Tribunal had considered the case of an assessee engaged in providing outdoor catering service, and its entitlement to the benefit of Notification 12/2003-ST, in its decision in Sky Gourmet Pvt Ltd v CST, Bangalore, 2009 (14) STR 777 (Tri-Bang), dated 30-09-2009, wherein it has been held as under: " 4. On a very careful consideration of the issue, we find that the appellants are registered under the category of 'Outdoor Catering Services'. Though in their appeal, they made a point that they would not be liable to service tax under the category of 'Outdoor Catering Services', when the argument was before this Bench that approach had been given up and they were mainly urging the point that they would be entitled for benefit of exemption Notification No. 12/2003-S.T. It is seen that the appellants had already discharged service tax liability on the gross receipt excluding the cost of the food, beverages, etc. This is not in dispute. As regards the legal position with regard to the exclusion of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s very clear from several decisions of the Tribunal. 5. Further, the benefit of Notification No. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is inclusion of value of goods sold by the assessee and in view of the separate invoices raised for the food and beverages having been supplied and having been paid for separately, the food supplied should be treated as sale of goods and hence no service tax can be levied to that extent. By relying on the Judgment of the Hon'ble Supreme Court in the case of BSNL v. Union of India reported in 2006 (2) S.T.R. 161 (S.C.) the benefit of Notification No. 12/2003 was held applicable to the assessee. Accordingly, the appeal was allowed. The imposition of penalty was set aside and consequential reliefs were granted. Hence, the present appeals by the revenue. 5. Therefore it is clear that the question that arises for consideration in this appeal is as to whether the assessee are liable to pay service tax for the services rendered by him as outdoor caterer. 6. The identical question with regard to the liability of the assessee towards service tax so far as service rendered by them with regard to the outdoor catering is concerned, came up for consideration before the Division Bench of this Court in Writ Appeal Nos. 671 to 726/2011 which were disposed off by the order dated 18-4-2011. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conscious of the fact that in the decision in Sayaji Hotels Ltd v CCE Indore, 2011 (24) STR 177, that has been adopted by the adjudicating authority, a view contrary to that expressed in Sky Gourmet Pvt Ltd v CST, Bangalore, 2009 (14) STR 777 (Tri-Bang) has been taken. However, since Karnataka High Court has expressed a view in consonance with the aforesaid decision of the Tribunal in Sky Gourmet Pvt Ltd v CST, Bangalore and affirming the Tribunal decision in LSG Sky Chefs (India) Pvt Ltd v Commissioner of S.T. Bangalore, 2009 (18) STR 37 (Tri-Bang) that had followed the earlier LSG Sky Chefs (India) Pvt Ltd v Commissioner of S.T. Bangalore, 2009 (15) STR 545 (Tri-Bang), we would yield to the superior wisdom of the Honourable High Court of Karnataka in this regard. Further, to our mind, a catering contract is not a pure service contract or can the dominant nature test be applied for interpreting so, for the simple reason that the Honourable Apex Court in the case of BSNL cited supra, has categorically held as under: "47. We agree. After the 46th Amendment, the sale element of those contracts which are covered by the six sub-clauses of Clause (29A) of Article 366 are separable an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal of the officers over the years, remains uncontroverted. 22. We also find it dichotomous that the adjudicating authority is determining that the VAT laws do not consider the appellant's manner of accounting the value of the goods/materials sold as "sale" when there is a studied silence on the above averments of the appellant regarding the documentary proof that the appellant relies on pertaining to its compliance of state VAT laws and when there is no reliance seen placed on any official notice/letter of the VAT authorities denying the appellant's discharge of its obligation under the State VAT Laws, or finding it wanting on any aspect, particularly when they are the authorities competent to determine the sufficiency of the appellant's compliance of the state VAT laws. 23. In view of our discussions above, the finding of the adjudicating authority that the appellant is not eligible for the benefit of Notification No.12/2003-St dated 20-06-2003 and the consequent demand and imposition of penalty, cannot sustain and is liable to be set aside. WHETHER THE INVOKING OF EXTENDED PERIOD OF LIMITATION IS TENABLE 24. The Ld. Counsel for the appellant is right in his submission that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de payment of duty, the adjudicating authority erred in upholding the invocation of extended period of limitation. It is also pertinent that there is no evidence let in of any positive or deliberate act on the part of the appellant with intention to evade payment of duty. 27. We also note from the appeal records that the SCN dated 20.09.2013 has been issued pursuant to an audit conducted. The appellant has stated in its grounds of appeal that its records were also verified during the previous audit dated 26-11-08 for the period April 05 to October 08. There is no allegation that the appellant is not regularly filing its returns or have not reflected the manner of its levy of service tax in its invoices. The present SCN is also issued placing reliance on the records of the appellant alone and not premised on any statements recorded or any other evidence indicating any willful suppression or misstatement of facts. In such circumstances, when the appellant was inspected and audit conducted and the audit queries replied to, there could not be a case of suppression and the Department could not have invoked the extended period of limitation, as has been held in a line of decisions, such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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