TaxTMI 
TaxTMI 
2022 (3) TMI 329
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....t paying service tax on food cooked and supplied in package to the customers as per their direction. A show cause notice dated 09.09.2019 was issued wherein it was contended that as per clause (i) of Section 66E of the Finance Act, 1994, service portion in any activity wherein goods, being food or any other articles of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of activity is a declared service. It was further contended that as per Rule 2C of Service Tax (Determination of Value) Rules 2006, the value of service portion in any activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of activity at restaurant or as outdoor catering shall be specified percentage of the total amount charged for such supply in terms of the following table. Sl. No. Description Percentage of the total amount (1) (2) (3) 1. Service portion in an activity wherein goods, consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity, at a restaurant. 40 2. Service portion in o....
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....re of this activity, it is clearly a sale of food, no service is involved. This issue is no longer res-integra as the same has been considered by the Hon'ble Madras High Court in the above cited judgement wherein the Hon'ble High Court has passed following detailed order: 21. Service tax was initially levied on the sale of food and drink in all restaurants without exception and Entry 19 of Notification 25 of 2012 levied tax on services provided in relation to serving of food and beverages by a restaurant, eating joint or mess. 22. The levy was restricted to sales in air-conditioned restaurants alone, vide Notification No. 3 of 2013-S.T., dated 1-3-2013, commonly referred to as the mega exemption notification, that carved out specified exclusions from the coverage of the Act. By virtue of Notification 3 of 2013, the levy of tax was restricted only to those restaurants, eating joints or mess, that have the facility of air-conditioning or central heating in any part of the establishment at any time during the year. 23. Section 66E declares that specified services shall attract the levy of service tax and reads as follows : Section 66E. Declared serv....
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....itchen, only the service provided in the specified restaurant is liable to service tax and service provided in a non-air-conditioned or non-centrally air-heated restaurant will not be liable to service tax. In such cases, service provided in the non-air-conditioned/non-centrally air-heated restaurant will be treated as exempted service and credit entitlement will be as per the Cenvat Credit Rules. 2 In a hotel, if services are provided by a specified restaurant in other areas e.g. swimming pool or an open area attached to the restaurant, will service tax arise? Yes. Services provided by specified restaurant in other areas of the hotel are liable to service tax. 3 Whether service tax is leviable on goods sold on MRP basis across the counter as part of the Bill/invoice. If goods are sold on MRP basis (fixed under the Legal Metrology Act) they have to be excluded from total amount for the determination of value of service portion. 3. Trade Notice/Public Notice may be issued to the field formations and taxpayers. Please acknowledge receipt of this Circular. Hindi version follows. 25. In Circular No. 334 of 2011, dated 28-2-2011, the scope of various new se....
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....ear the conditions for the levy shall be met. 1.6 The levy is intended to be confined to the value of services contained in the composite contract and shall not cover either the meal portion in the composite contract or mere sale of food by way of pick-up or home delivery, as also goods sold at MRP. Finance Minister has announced in his budget speech 70% abatement on this service, which is inter alia, meant to separate such portion of the bill as relates to the deemed sale of meals and beverages. The relevant notification will be issued when the levy is operationalized after the enactment of the Finance Bill. 26. Thus, not all services rendered by restaurants in the sale of food and drink are taxable and it is only certain specified situations that attract tax. The sale of food and drink simplicitor, services of selection and purchase of ingredients, preparation of ingredients for cooking and the actual preparation of the food and drink would not attract the levy of tax. Only those services commencing from the point where the food and drinks are collected for service at the table till the raising of the bill, are covered. This would encompass a gamut of services i....