2016 (8) TMI 44 - AT - Service Tax

Hospital's Rented Space: Outdoor Catering Services or Not? Penalties Revoked for Lack of Malafide Intent

The Tribunal held that providing services at a hospital's rented place constituted outdoor catering services based on legal interpretations. The penalties ... Outdoor catering services or not - running a restaurant/canteen at the hospitals rented place - Held that:- such type of providing of services at a place acquired by way of tenancy in the premises of the particular institution, would amount to providing outdoor catering services. - Decision in the case of in the case of Indian Coffee Workers’ Co-op. Society Ltd. vs. CCE & ST, Allahabad [2014 (4) TMI 407 - ALLAHABAD HIGH COURT]. followed. As regards penalties, learned Advocate submits that there was no malafide on their part in as much as the outdoor caterers services were introduced w.e.f. 01/3/2006 when the earlier exemption notification were withdrawn. The period involved in the present appeals start from 01/4/2006 and the issue being a legal issue of interpretation of the definition and being the subject matter of the litigation before various courts, there was a bonafide belief on the part of the Assessee, in which case imposition of penalty would not be justifiable. While confirming service tax demand for the normal period, penalty waived - Decided partly in favor of assessee. Issues:1. Whether providing services at a hospital's rented place constitutes outdoor catering services.2. Interpretation of the definition of caterer and outdoor caterer under the Finance Act, 1994.3. Imposition of penalty for non-payment of duty.Analysis:1. The dispute in the case revolved around whether providing services at a hospital's rented place qualifies as outdoor catering services. The appellant was running a restaurant/canteen in the hospital premises, serving employees, patients, and visitors. The lower authorities had confirmed a duty demand, alleging the appellant was engaged in providing outdoor caterer services.2. The Tribunal referred to a decision by the Hon'ble Allahabad High Court in the case of Indian Coffee Workers' Co-op. Society Ltd. vs. CCE & ST, Allahabad. The High Court's decision clarified that providing services at a place acquired by tenancy in an institution's premises would constitute outdoor catering services. The Tribunal, after considering the definitions of caterer and outdoor caterer under the Finance Act, 1994, concurred with the High Court's interpretation.3. Regarding the imposition of penalties, the appellant argued that there was no malafide intent as the introduction of outdoor caterer services coincided with the withdrawal of exemption notifications. The Tribunal agreed that the issue involved a legal interpretation and was subject to litigation in various courts. Given the complexity and nascent nature of service tax laws, the Tribunal found no malafide intent on the part of the Assessee, leading to the setting aside of the penalties imposed.In conclusion, the Tribunal upheld that providing services at a hospital's rented place constituted outdoor catering services based on legal interpretations. The penalties for non-payment of duty were revoked due to the absence of malafide intent on the part of the Assessee and the complexity of the legal issue.