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Issues: Whether service tax was leviable on food and beverages sold by restaurants as takeaway or parcel sales, and whether such transactions fell within the scope of declared restaurant services under the Finance Act, 1994.
Analysis: The statutory definition of service excludes transfer of title in goods by way of sale. Declared services under section 66E cover the service portion in an activity involving supply of food or drink, but the levy is directed at the composite restaurant service characterised by table service, seating, ambience, air-conditioning and other attendant facilities. The materials relied on by the revenue, including the departmental circulars and exemption notification, indicate that the levy was intended to apply to specified restaurant services and not to mere sale of food by way of pick-up or home delivery. In takeaway transactions, the essential attributes of restaurant service are absent, the food is collected from a separate counter, and consumption takes place outside the restaurant premises.
Conclusion: Takeaway and parcel sales of food by restaurants were held not exigible to service tax.
Final Conclusion: The impugned demand orders could not be sustained, and the writ petitions were allowed with the demands set aside.
Ratio Decidendi: Where food is sold by a restaurant as takeaway or parcel without the attributes of restaurant service, the transaction is sale of goods and not a taxable restaurant service under the service tax regime.
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