Tribunal Upholds Exemption for Canteen Services in Factories; Dismisses Revenue's Appeal on Service Tax Decision.

The Tribunal dismissed the Revenue's appeal, affirming the Principal Commissioner's decision to drop the show cause proceedings against the Respondent, who provided canteen services in factories under the Factories Act, 1948. The Tribunal concluded that the services were exempt from service tax under Notification No. 14/2013-S.T., citing consistent precedents. The Respondent's cross objection was also disposed of, and the judgment was pronounced in open court.

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Issues:
Interpretation of Notification No. 14/2013-S.T. dated 22.10.2013 regarding exemption from Service Tax for canteen services provided in factories under the Factories Act, 1948.

Analysis:
The case involved a dispute where the Respondent, engaged in providing canteen services to industrial establishments, claimed exemption from service tax under entry Sr. No. 19 A in Notification No. 14/2013-S.T. The agreements with the establishments outlined the provision of canteen and catering services by the Respondent, who procured raw materials and prepared food in the factory premises. The Respondent argued that it provided services only in canteens within factories governed by the Factories Act, 1948, with air conditioning facilities. The department initiated show cause proceedings, which were dropped by the Principal Commissioner of Service Tax, Pune, in an adjudication order dated 16.09.2016. The Revenue appealed this decision before the Tribunal.

The Tribunal noted that Notification No. 14/2013-S.T. dated 22.10.2013 exempted services related to serving food or beverages in canteens maintained in factories covered by the Factories Act, 1948, with air conditioning. The show cause notice did not contest that the factories where the Respondent operated canteens were under the Factories Act, 1948, and had air conditioning. Citing precedents, including cases like M/s. ICS Foods Pvt. Ltd. and Sodexo Facilities Management Services India Pvt. Ltd., the Tribunal found that the issue was settled. Notably, the Tribunal mentioned that the Supreme Court had upheld a similar decision in the case of ICS Food Pvt. Ltd. in 2019.

Given the settled nature of the issue and the consistency of previous judgments, the Tribunal dismissed the Revenue's appeal, affirming the decision to drop the show cause proceedings against the Respondent. The cross objection filed by the Respondent was also disposed of accordingly. The judgment was dictated and pronounced in open court by the Tribunal.

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