Applicability of Service tax

[OM PRAKASH]

In the case of Outdoor Caterer : Is service tax apply on :- Canteen Sale or Coupon sale Whether two agreements, one for food and one for service charges by the service receipient - is justified in law even though it is not pratically possible to separate the food cost and service element.

[Madhukar N Hiregange]

In the 46th amendment there is a possibility of bifurcating one contract into 2 parts one for materials and one for labour/ services. Therefore the bifurcation in the order could be acceptable unless the same is used to hoodwink the tax department.

AI Summary

Contract bifurcation may separate supply and service elements for tax purposes unless used to evade tax.
Advisory: Service tax characterization for outdoor catering may treat a single contract as bifurcated into supply (materials/food) and service (labour/charges); such bifurcation is permissible under the amendment permitting separation, but will not be respected where it is used to evade or mislead tax authorities.