Sale of food through take-away and home delivery by restaurants not liable to service tax

CESTAT NEW DELHI held that sale of food items through take-away and home delivery by restaurants is not liable to service tax. Following the precedent in Haldiram Marketing Pvt. Ltd. case, the Tribunal determined that such transactions constitute sale of goods rather than provision of services, as food items are not served at the restaurant premises and lack service elements typically associated with restaurant services. The dominant nature of these transactions is sale, not service, making them exempt from service tax liability. The impugned order was set aside and appeal was allowed.

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Issues:
1. Taxability of sale of food items through "Take-Away" and "Home Delivery" under Restaurant Services.

Detailed Analysis:
The appellant challenged the order confirming the demand of service tax on the sale of food items through "Take-Away" and "Home Delivery" under Restaurant Services. The appellant was registered under various taxable categories, including Restaurant Service. The audit team observed the sale of food items through "Take-Away" and "Home Delivery" during the financial years 2013-14 and 2014-15. A show cause notice was issued, leading to the confirmation of the demand along with interest and penalty. The issue revolved around whether these activities amounted to taxable service under Restaurant Service.

The Tribunal referred to a previous case involving similar facts, Haldiram Marketing Pvt. Ltd. Vs. Commissioner of CGST, GST, Delhi East Commissionerate, where it was held that the sale of food items through "Take-Away" or "Home Delivery" does not attract service tax as it constitutes a sale and not a service. The Tribunal considered the provisions of the Finance Act, Circulars, and previous judicial decisions to conclude that the dominant nature of the transaction in such cases is that of sale, not service. The Tribunal emphasized that services like dining facilities, table clearing, and food preparation are not involved in "Take-Away" transactions, leading to the activity being classified as a sale of goods rather than a service.

Based on the precedent set in the Haldiram case and the absence of any service element in the sale of food items through "Take-Away" or "Home Delivery," the Tribunal ruled in favor of the appellant. The Tribunal held that the activity of selling food items through "Take-Away" or "Home Delivery" does not attract service tax and is purely a sale of goods. Consequently, the impugned order confirming the demand of service tax was set aside, and the appeal by the appellant was allowed.

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