Service Tax on Canteen services

[Pradeep Jain]

Sir,

Entry no. 19A of Notification no. 25/2012 dated 20.06.12 inserted dated 20.06.12 vide notification no. 14/2013 dated 22.1013 envisages exemption to services provided in relation to the serving of food of beverages by a canteen maintained in a factory covered under Factories Act, 1948.

In this connection we are getting canteen services that is required as per Factories Act from the outdoor caterer for this purpose space for cooking of foods and a hall to service food to employees provided by the company .

In such case Canteen Service Tax provider is eligible to get the above exemption .

I would like to state that our Canteen service tax provider has taken service tax registration under the under Outdoor Caterer . And service tax department of their jurisdiction insisting to pay service tax thereon. Reason mentioned is that - he is providing catering service to the factories from his centralized kitchen and in some cases he is cooking the food in the factory premises itself. Hence the service contract is with the respective factories only as an Outdoor Caterer . In view of the same above said exemption is not applicable.

Kindly advise .

With best Regards

Pradeep Jain

AI Summary

Debate Over Service Tax Exemption for Factory Canteen Services by Outdoor Caterers Under Notification No. 25/2012 A query was raised regarding the applicability of service tax exemption for canteen services provided by an outdoor caterer in a factory setting, as per Notification No. 25/2012. The service tax department insisted on taxing the caterer, arguing that the exemption does not apply since the service is provided from a centralized kitchen or within factory premises. Respondents suggested that the exemption should apply, and if service tax is charged, companies can claim CENVAT credit. Recent judgments, including those from the Delhi Tribunal and Bombay High Court, support the admissibility of CENVAT credit for such services.