2017 (12) TMI 837 - AT - Service Tax

CESTAT rules for Revenue on service tax for catering services, no penalties imposed

CST, New Delhi Versus M/s. Gourmets Food

The Appellate Tribunal CESTAT New Delhi ruled in favor of the Revenue by setting aside the portion of the order dropping the demand for service tax on ... Outdoor catering service - only premise on which the impugned order came to a conclusion regarding non-liability to the service tax is on the basis of payment arrangement for the facilities like space, infrastructure provided by the club to the respondent - Held that: - A full reading of the agreement makes it clear that the respondent has been appointed as an outdoor caterer to render catering service in the premises provided the Anand Niketan Club. Various terms of the agreement makes it clear that Anand Niketan Club has no obligation or responsibility in providing such service of catering by the respondent. There is no shared responsibility or obligation, legally enforceable against the Anand Niketan Club except the provisions of terms and conditions inbuilt in the contract - there is no scope for interpreting the agreement as Joint Venture Agreement for a catering service. Penalties - Held that: - the impugned order records that the tax liability confirmed under “Outdoor catering service” and “man power supply services” provided to IOCL stands paid along with interest and the same has been ordered to be appropriated - penalty rightly set aside. Appeal allowed in part. Issues:1. Liability of service tax on outdoor catering service provided by the respondent.2. Imposition of penalties on the respondent.Analysis:1. The case involved a dispute over the liability of service tax on outdoor catering services provided by the respondent to Anand Niketan Club. The Revenue contended that the arrangement was not a joint venture and fell under the category of taxable 'outdoor caterer's service.' The Original Authority had dropped the demand based on the interpretation of the agreement as a revenue-sharing arrangement, not establishing a service provider and recipient relationship. The Appellate Tribunal analyzed the agreement and concluded that the respondent was appointed as a caterer to provide services at the club's premises. The payment arrangement based on a percentage of the respondent's income did not make it a joint venture. The Tribunal found that the club had no obligation in providing catering services, and the terms of the agreement did not indicate a joint venture. Therefore, the Tribunal set aside the portion of the order dropping the demand for service tax on outdoor catering services.2. The second issue pertained to the imposition of penalties on the respondent. The impugned order confirmed the tax liability for outdoor catering services and manpower supply services to IOCL, which had been paid along with interest. The Original Authority did not impose penalties on the respondent, considering the tax liability had been settled. The Tribunal agreed with this decision, stating that in the circumstances where the tax liability had been paid and appropriated, there was no justification for imposing penalties. Consequently, the Tribunal partly allowed the appeal of the Revenue, upholding the service tax liability on outdoor catering services and dismissing the imposition of penalties on the respondent.In conclusion, the Appellate Tribunal CESTAT New Delhi ruled in favor of the Revenue by setting aside the portion of the order dropping the demand for service tax on outdoor catering services provided by the respondent. However, the Tribunal agreed with the Original Authority's decision not to impose penalties on the respondent, as the tax liability had been paid. The judgment provides a detailed analysis of the agreement between the parties and clarifies the nature of the service arrangement, emphasizing the absence of a joint venture and the liability of the respondent for service tax on the catering services provided.