TaxTMI 
TaxTMI 
2024 (3) TMI 283
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....eal relates to demand of service tax on the supply of meals and other food items by the respondent to the airlines. According to the respondent, supply of meals would not be a 'declared service' and so far as the services are concerned, the respondent paid service tax on all the services provided by the respondent to the airlines. 4. A show cause notice dated 15.02.2017 for the period is from 01.07.2012 to March 2016 was issued to the respondent alleging that the dominant nature of service provided by the respondent to the airlines would be covered under 'catering services', which is a taxable service under Chapter V of the Finance Act, 1994 [the Finance Act]. The show cause notice after referring to the definition of 'service' contained in section 65B (44) of the Finance Act, as also to section 66E (i) of the Finance Act states that the said service would include service portion in an activity where goods, being food or any other article for human consumption or any drink, are supplied in any manner as a part of the activity. The show cause notice, therefore, alleges that the activity performed by the respondent would be covered as a 'declared service' under section 66E of the ....
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....ages and the ancillary services like transportation, handling etc. have been provided for separately. Thus, it is clear that the terms of the contract represent a divisible contract for the supply of food and provision of ancillary services. Accordingly, the Noticee has been charging separately for food and for other services. I also find force in the contention of the Noticee that the clients of the Noticee are not obliged to take transportation, handling and other allied services mandatorily and they have a choice to opt or not to opt for availing these services. It, therefore, implies that the supply of food and beverages and provision of other services are two different activities. In such a situation, it cannot be said that the impugned services and supply of food is a single activity and the components are naturally bundled wherein the main element is supply of food." (emphasis supplied) 8. The Commissioner thereafter examined whether the provisions of section 66E (i) of the Finance Act would be applicable in the present case and in this connection recorded the following findings: "20.6 The revenue has also alleged that the Noticee is supplying food as per the ....
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....under section 66E (i) of the Finance Act. Learned authorized representative also submitted that the Commissioner did not properly appreciate the terms of the Agreement. The submission of the learned authorized representative is that w.e.f. 01.07.2012 all services other than the services included in the negative list of services contained in section 66D of the Finance Act are taxable and in the present case the services rendered by the respondent are neither covered under the negative list nor they have been exempted by any notification. 11. Shri Parth Shah, learned consultant appearing for the respondent has, however, supported the impugned order. Learned consultant pointed out that the respondent cannot be said to be providing 'outdoor catering service' for the reason that the Agreement specifically provides for supply of meals to the airlines and though the Agreement also provides for ancillary services like handling, transportation services, laundry services, but the amount of consideration is distinctly defined for each of the supply of service and that the respondent paid sales tax on the supply of food to airlines, and service tax on transportation, handling and laundry ch....
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....he Constitution as also the exemption notification dated 20.06.2003. The relevant portion of the decision is reproduced below: "4. ***** It is very clear from the Article 366(29A)(f) that a tax on the supply of goods being food or any article for human consumption where such supply of service, is for cash, deferred payment and other valuable services and that supply of any goods shall be deemed to be a sale. We also noted that the decision of the Hon'ble Supreme Court in the case of BSNL v. Union of India (supra). It is very clear that Article 366(29A) specifically provides a legal fiction in respect of catering contracts where the contracts can be divisible into two components, i.e. service portion and sale of goods portion. As far as the sale of goods portion is concerned, it is very clear that VAT or sale tax has already been discharged by the appellants. Once the sale tax has already been discharged by them, they cannot be asked to pay service tax on the same value. This is very clear from several decisions of the Tribunal. 5. Further, the benefit of Notification No. 12/2003-S.T. is available to all the services. There is an exclusion of the value of the goods....
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....charging liability under service tax. The demand of Revenue in the given circumstances is not sustainable and the order under challenge is set aside and the appeal is allowed." (emphasis supplied) 17. The Karnataka High Court in Commissioner of Service Tax, Bangalore vs. LSG Sky Chef India Pvt. Ltd. [2012 (27) S.T.R. 5 (Kar.)], where the period involved was from 01.04.2006 to 31.03.2007, observed as follows: "6. The identical question with regard to the liability of the assessee towards service tax so far as service rendered by them with regard to the outdoor catering is concerned, came up for consideration before the Division Bench of this Court in Writ Appeal Nos. 671 to 726/2011 which were disposed off by the order dated 18-4-2011. By a detailed consideration and relying on various Supreme Court judgments, the Division Bench of this Court came to the conclusion that the outdoor catering contract is a contract for service by virtue of sub-clause (f) Clause 29A of Article 366 of the Constitution of India which has to be treated as composite contract and the State Legislature is competent to levy the sales tax on the sale aspect only namely, the value of the food art....
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....oods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or" ***** " 21. It would be seen that section 65B (44) defines 'service' to mean any activity carried out by a person for consideration, and includes a declared service, but shall not include, amongst others, an activity which constitutes merely such transfer, delivery or supply of any goods which would be deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution. 22. Section 65B (51) of the Finance Act defines 'a taxable service' to mean any service on which service tax is leviable under section 66B. 23. Though the notification dated 20.06.2003 was rescinded on the introduction of the negative list regime, but the legal position would not change in view of the definition of 'service' under section 65B(44) of the Finance Act and the provisions of article 366(29A) of the Constitution. This is also clear from the Education Guide issued by CBEC on 19.06.2012. Paragraph 2.6.4 clarifies the reason for del....