2013 (10) TMI 343 - AT - Service Tax

Tribunal Upholds Service Tax Liability & Penalties, Analyzes Jurisdiction & Services

The Tribunal upheld the adjudication order, dismissing the appeal against the service tax liability and penalties imposed on the appellant. The judgment ... Outdoor Catering Service u/s 67(76a) r.w. 65(24) - The assessee provided food to NTPC employees from a premises provided by NTPC under a license granted to the assessee in the NTPC premises – Revenue was of the view that the assessee provided the taxable services as outdoor caterer, defined in 65(76a) read with Section 65(24) of the Finance Act, 1994 – Held that:- Following Rajeev Kumar Gupta vs. CCE, Jaipur [2009 (3) TMI 122 - CESTAT, NEW DELHI ] - it was apparent that the assessee was himself engaged in the preparation of food items in the company premises with all the infrastructure for such service having been provided to the service recipient - It was not the case of the assessee that the assessee, a co-operative society was itself engaged in preparing the food and serving the same to the NTPC or Lanco employees - It had deputed personnel to perform these services for the benefit of service recipients - In Raj Kumar Jain vs. CCE, Jaipur-I [2008 (8) TMI 62 - CESTAT NEW DELHI ] - the contention of the assessee was rejected to immunity to tax for having provided outdoor catering service on the ground that the assessee was providing outdoor services in the premises of the service recipient and therefore the service falls within the specified taxable service – assessee was admittedly engaged in supply of food and beverages to air companies for inflight service to passengers on board and therefore the taxable outdoor catering service had occurred. In the totality of circumstances, we are not persuaded as to existence of any circumstances justifying a bonafide belief of the appellant that on a true and fair construction of relevant provision of Sections 65(24), 65(76a) and Section 65(41)(n), the appellant was not providing the taxable outdoor catering service - The levy of penalties was thus vitiated by no error – there was no merit in the assessee’s appeal – Decided against assessee. Issues: Jurisdiction of adjudicating authority, Liability for service tax, Imposition of penaltiesJurisdiction of Adjudicating Authority:The appeal challenges the order-in-appeal confirming the adjudication order passed by the Joint Commissioner, Central Excise, Allahabad. The appellant, a Co-operative Society based in Jabalpur, Madhya Pradesh, provided food services to NTPC employees at Rihand Nagar, within the territorial limits of the Commissionerate at Allahabad. The appellant contested the jurisdiction of the Allahabad Commissionerate to adjudicate the liability, arguing that its office fell under the Jabalpur Commissionerate's jurisdiction. However, this objection was not raised at earlier stages. The Tribunal held that the objection to jurisdiction, raised for the first time before them, cannot invalidate the proceedings as the service provided by the appellant occurred within Allahabad Commissionerate's limits, and no failure of justice was demonstrated. The Tribunal referred to the normative jurisprudence on objections to jurisdiction derived from The Code of Civil Procedure, indicating that the objection should have been raised at the earliest possible opportunity to be considered valid.Liability for Service Tax:The dispute arose from the Revenue's assumption that the appellant provided taxable services as an outdoor caterer to NTPC and Lanco. The appellant contended that it provided canteen services under contracts with these entities and did not fall under the definition of an outdoor caterer. The adjudicating authority and the appellate authority disagreed, upholding the service tax levy, interest, and penalties imposed on the appellant. The Tribunal analyzed the relevant provisions of the Finance Act, 1994, specifically Sections 65(24), 65(76a), and 65(41)(n), defining caterer, outdoor caterer, and taxable service, respectively. It concluded that the appellant received consideration for providing outdoor catering services, meeting the criteria outlined in the Act. The Tribunal found no grounds to interfere with the adjudication order confirming the service tax liability.Imposition of Penalties:The appellant argued that the penalties imposed under Sections 77 and 78 lacked basis as there was no wilful suppression of facts or intent to evade service tax payment. Citing precedents, the appellant contended that the service provided did not fall under taxable outdoor catering services. However, the Tribunal noted that the appellant's case differed from the cited judgments, where the service provider was directly involved in food preparation. In this case, the appellant delegated personnel to provide services at the recipients' premises. The Tribunal found no justification for the appellant's belief that it was not liable for service tax, thereby upholding the penalties imposed. Referring to relevant case laws, the Tribunal dismissed the appeal, emphasizing the lack of merit and justification for challenging the penalties.In conclusion, the Tribunal upheld the adjudication order, dismissing the appeal against the service tax liability and penalties imposed on the appellant. The judgment provides a detailed analysis of the jurisdictional issue, the nature of services provided, and the rationale behind the imposition of penalties under the relevant provisions of the Finance Act, 1994.