2018 (3) TMI 1489 - AT - Service Tax

Appellate Tribunal rules food supply to college not taxable as Outdoor Catering Service.

The Appellate Tribunal CESTAT ALLAHABAD ruled in favor of the appellant, overturning the Commissioner (Appeals) decision. The Tribunal reinstated the ... Outdoor Catering Service - food was supplied to the said college as Tiffin service till financial year 2007-2008 and that food was prepared at appellant's premises, packed and supplied to hostel - Held that: - circular no.332/82/97-TRU dated 24.09.1997 also clarifies that sale of food across the counter, as in fast food joints/restaurants or serving of foods in a restaurant/ hotels do not fall within the ambit of outdoor catering, nor does mere free delivery (or delivery at a nominal cost to cover transportation charges) of food by a fast food joint, restaurant etc. shall be subject to Service Tax as in such cases there is no service element and only a mere sale of food. Taking into consideration the terms of agreement, activities of the appellant and CBEC Circular dated 24.09.1997 referred by Original Authority, Original Authority's order needs to be restored, since the same is sustainable - appeal allowed. Issues:Interpretation of the definition of Outdoor Catering Service for service tax liability.Analysis:The case involved a dispute regarding the applicability of service tax on the activity of supplying food in tiffin boxes to a college. The Revenue contended that the activity fell under the definition of Outdoor Catering Service, thus attracting service tax liability. The Original Authority, in its Order-in-Original, analyzed the agreement between the parties and referred to a CBEC Circular to conclude that the service provided did not constitute Outdoor Catering Service. The Original Authority held that the supply of food in tiffin by the party to the institute could be considered as sale of food across the counter or mere free delivery, which did not fall under the ambit of service tax. The Original Authority emphasized the absence of a service element in the activity and the lack of evidence supporting the Revenue's claims regarding the preparation and supply of food. Consequently, the Original Authority ruled that no service tax was leviable on the service provided by the party during the relevant period.The Commissioner (Appeals) overturned the Order-in-Original and upheld the demand for service tax along with imposing a penalty. The appellant challenged this decision before the Appellate Tribunal CESTAT ALLAHABAD. During the proceedings, the appellant argued that similar cases under comparable circumstances had not been subjected to a review of adjudication orders, highlighting a decision of the Hon'ble Apex Court in support of their position.After hearing the arguments from both sides, the Tribunal examined the terms of the agreement, the activities of the appellant, and the CBEC Circular cited by the Original Authority. The Tribunal found that the Order-in-Original was well-founded and sustainable based on the evidence and legal interpretations presented. Consequently, the Tribunal set aside the Order-in-Appeal and reinstated the Order-in-Original, thereby allowing the appeal in favor of the appellant.In conclusion, the judgment clarified the interpretation of the definition of Outdoor Catering Service for determining service tax liability in the context of supplying food in tiffin boxes. The decision emphasized the importance of analyzing the nature of the service provided, the absence of a service element, and the relevance of relevant legal provisions and circulars in resolving disputes related to service tax applicability.