Custom, Excise & Service Tax Tribunal
Jindal Hotels Ltd vs Vadodara-I on 9 January, 2024
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO. 2
Services Tax Appeal No. 11315 of 2016-DB
(Arising out of OIO-VAD-EXCUS-001-COM-042-15-16 Dated-31/03/2016 passed by
Commissioner of Central Excise, Customs and Service Tax-VADODARA-I)
Jindal Hotels Ltd ........Appellant
(Surya Palace Hotel) Opp. Parsi Agiari, Sayajigunj,
Vadodara, Gujarat
VERSUS
C.C.E. & S.T.-Vadodara-i ........Respondent
1st Floor...Central Excise Building,
Race Course Circle, Vadodara,
Gujarat-390007
APPEARANCE:
Shri. Saurabh Dixit, Advocate for the Appellant
Shri. Rajesh R Kurup, Superintendent (AR) for the Respondent
CORAM: HON'BLE MR. SOMESH ARORA, MEMBER (JUDICIAL)
HON'BLE MR. C.L MAHAR, MEMBER (TECHNICAL)
Final Order No. A/ 10075 /2024
DATE OF HEARING:12.10.2023
DATE OF DECISION:09.01.2024
SOMESH ARORA
Brief facts of the case are that the assessee is engaged in the business
of running a hotel under the name & style of "Surya Palace Hotels". They
were engaged in providing of various Service viz. Accommodation to their
guests, Room Services, Mandap keeper Services, outdoor catering services,
Restaurant Services, Pandal and Shamiana Services, Management or
business consultant services and Renting of immovable property services,
etc. The hotel had rooms for guest accommodation, restaurants, health &
fitness centre, banquet halls (Mandap), Ballrooms, conference Room etc.
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2. During the course of Audit of records of the assessee, it was observed
that during the period 2010-2011 to 2013-14 (Up to 11.04.2013), the
assessee had provided the services in relation to use of Mandap to their
customers, which is taxable Prev) under Section 65(105) (m) read with
Section 65(66) and 65 (67) of the Finance Act, 1994 (i.e., "the Act"). During
the course of providing such services of Mandap Keeper" against
consideration received for organizing any official, social or business function,
they also provided service of flower decoration, hiring of music instruments,
electronic IT product etc., and the services as a caterer as defined in Section
65(24) ibid, [i.e. they prepared and served food and beverages to the
customers including their guests).
3. It was also observed by the department that the assessee was splitting
the gross amount charged in relation to the services of Mandap Keeper into
two parts and collected the said amount from their customers by issuing two
separate invoices viz. (i) charges for Mandap and other services, if any, and
(ii) charges for food and beverages. The assessee did not pay any service
tax on the amount charged and collected towards food and beverages ie.,
catering services or 'Banquet Taxable Sale, in terms of notification no.
1/2006 - ST dated 01.03.2006 (or the period 2010-11 to 2012-13 (up to
30.06.2012) and in terms of notification no. 26/2012-ST dated 20.06. 2012
(from 01.07.2012 to 11.04.2013).
4. It appeared to the department that, in the present case, the supply of
food & beverages by the Assessee during the course of Mandap keeper
Service was neither "sale" nor "deemed sale in order to claim exemption
under Notification No. 12/2003 - ST dated 20.06.2003, which referred to
"sold" but not "supply". Hence, it appeared that the benefit of Notification
No. 12/2003 -S.T was not available to the Assessee in the present case, and
that they were liable to pay Service Tax only in terms of Notification no.
1/2006 ST and 26/2012 - ST
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5. The auditors also observed that the assessee did not pay service tax
on the amount charged and collected towards Internet services, Business
Auxiliary Services, GTA services and Sponsorship services. It also appeared
that the services received by the assessee from overseas service providers,
not having an office in India, in relation to the preparation of digital
advertising material and in connection with the international
culinary/recipe/foodservice software development and other relevant
consultancy in respect of Hotel of the assessee, for consideration in foreign
currency was liable to Service Tax under reverse Charge in terms of Section
66A of the Act, which appeared to have not been paid by the assessee.
6. It was alleged that the said fact of non-payment of Service Tax came
to the knowledge of the Department only during the course of audit. It
appeared that the Assessee wilfully suppressed the fact of providing such
services from the department with intent to evade payment of Service tax
and hence the extended period for the recovery of Service Tax appeared
applicable in the present case.78. In view of all the above, it appeared to
the department that the Assessee had contravened the provisions of Section
65, 66, 66A, 66B, 67, 68, 69, 70 of the Act (as amended) read with Service
Tax Rules 1994 (i.c., "the rules"), Place of Provision of Services Rules 2012,
Point of Taxation Rules 2011, Service Tax (determination of Valuation) Rules
2006 read with notification no. 1/2006-ST dated 01.03.2006 and Notification
No. 26/2012-ST, as amended. It therefore appeared that the Service tax
totaling to Rs. Rs.1,67,83,817/- is recoverable from the Assessee under
proviso to Section 73(1) of the Act, read with proviso to Section 73(4A) of
the Act, along with interest under Section 75 ibid. It appeared that for the
acts of omission and commission and contraventions of the provisions of the
Act, and Rules there under, with intent to evade payment of Service Tax,
they appeared liable to penal action under Section 76 and 78 of the Act.
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Hence the show-cause notice dated 13.10.2015 came to be issued to the
assessee.
7. The adjudicating authority after considering various submissions by
the party inter alia, gave the following findings:
"9. As per the allegations brought out in the show-cause notice, during the
course of Audit, the auditors observed that during the period 2010-2011 to
2012-13 (Up to 30.06.2012), the Assessee had provided the service in
relation to use of Mandap to their customers, which is taxable under Section
65(105) (m) read with Section 65(66) and 65 (67) of the Finance Act, 1994.
In course of providing the above service by providing temporary occupation
of a Mandap for a consideration for organizing any official, social or business
function, they also provided service of flower decoration, hiring of music
instruments, electronic-IT product etc. and services as a caterer as defined
in Section 65(24) ibid, i.e. they served food and beverages to the customers
including their guests.
8. The auditors observed that the Assessee has charged their customers
by splitting the invoices into two parts viz.;
a) Charges for Mandap and other services, if any, for which the
Assessee paid Service Tax @10.30% upto 31.03.2012 and @12.36%
from 01.04.2012] on the amount charged and collected towards
Mandap Keeper and some services other than the catering services
without availing any exemption notification / abetment in value.
b) Charges for food and beverages, on which the Assessee did not
pay any service tax on the amount charged and collected towards
Catering services, which is stated in the sales accounts as 'Banquet
Taxable Sale.
9. On being enquired, the Assessee verbally informed that they have
availed benefit of the notification no. 12/2003-ST dated 20.06.2003 which is
a general exemption notification. Verification of Half yearly ST-3 returns for
service category of Mandap Keeper / and for all other services filed by the
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Assessee from time to time during the period 2010-11 to 2012-13 revealed
that, despite specific query as to whether any exemption notification has
been availed, they had never claimed the benefit of the exemption
notification 12/2003-ST dated 20.06.2003, nor disclosed the same in their
ST-3 returns. However they have given reference, of notification no. 1/2006-
ST dated 01.03.2006 on the invoices issued for hall hiring charges.
Therefore, it was alleged that the Assessee ought to have paid service tax in
terms of abetment notification no. 01/2006-ST dated 01.03.2006 at the
appropriate rate and from appropriate date.
Whereas, under section 65 (24) of Finance Act, 1994, the definition of
"caterer" is defined as under:
"(24) "caterer" means any person who supplies, either directly or
indirectly, any food, edible preparations, alcoholic or non-alcoholic
beverages or crockery and similar articles or accoutrements for any
purpose of occasion".
Whereas, under section 65 (66) of Finance Act, 1994, the definition of
"mandap" is defined as under:
"(66) "Mandap" means any immovable property as defined in section 3
of the Transfer of Property Act, 1882 (4 of 1882) and includes any
furniture, fixtures, light fittings and floor coverings therein let out for
consideration for organizing any official, social or business function;
[Explanation-For the purposes of this clause, social function includes
marriage)".
Whereas, under section 65 (67) of Finance Act, 1994, the definition of
"Mandap Keeper" is defined as under:
"(67) "Mandap keeper" means a person who allows temporary
occupation of a Mandap for consideration for organizing any official,
social or business function; [Explanation. For the purposes of this
clause, social function includes marriage"]
Whereas, definition of taxable service of "Mandap Keeper" defined vide sub-
clauses (m) of section 65 (105) Finance Act 1994 as amended is as under:
"to any person, by a Mandap keeper in relation to the use of Mandap in
any manner including the facilities provided or to be provided to such
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person in relation to such use and also the services, if any, provided or
to be provided as a caterer."
10. In service provided or to be provided as a caterer in course of use of
Mandap is specifically included within the purview of "Mandap Keeper
Service Whereas, under Section 67 of the Finance Act, 1994 the taxable
value for the service in relation to use of Mandap is the gross amount
charged without any provision for abatement for the cost of food and
beverages served. Therefore, it appeared that the value of Mandap Keeper
service included the value of catering service provided, which is the value of
food and beverages plus the charges for serving the same.
11. After the introduction of Negative List regime, with effect from
01.07.2012, the clauses (a) to (i) of Section 66E declared certain services as
a taxable service. Clause (1) of the section declares service portion in
activity of supply of food or any article for human consumption or any drink
provided by any person as a taxable service. The definition of service given
in section 65B (44) of Finance Act 1994, is very wide. The "Service" Means
any activity carried out by person for consideration and includes a declared
services but shall not include (a) an activity which constitutes as mentioned
therein. The Clauses (a) to (q) of section 66D specify certain services as
non-taxable service. None of the services specificú in section 66D relates to
services provided by hotel. The notification No.25/2012-ST, dated
20.06.2012 grants exemption to services specified in the notification. None
of services specified therein related to services provided by hotel. Therefore
the services as discussed hereinabove having been provided by the Assessee
for consideration and hence were to be treated as taxable services in terms
of Section 65 B(44) ibid.
12. Whereas the entry No. 4 of Notification No. 26/2012-ST, dated
20.06.2012 provides the abatement for bundled service by way of supply of
food or any other article of human consumption or any other drink, in a
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premises (including hotel, convention centre, club, Pandal, Shamiana or any
other place, specially arranged for organizing a function) together with
renting of such premises subject to the conditions specified in the
corresponding entry in the column of condition" of non-availment of Cenvat
credit.
13. In view of above facts, it appeared that post 1-7-2012 also, the
service tax in relation to Mandap Keeper services along with other services
including supply of food contracts/catering services would have to be paid on
the abated value as provided for or on the entire value of the contract. It
also appeared that the new scheme of law (post 01.07.2012) doesn't provide
for an option for claiming deduction of goods as it provides for "Works
Contract" under Rule 2A of the Valuation Rules.
14. We find from the defense submissions of the assessee that, it has been
forcefully pleaded by them that they were guided by the Board Circular
No.176/1/2001-CX(4) (Pt.) dated 31.3.2004, and hence they had duly paid
VAT on sale of food and full Service Tax (without abetment) on the service
charges, which included hall hire, decoration etc., under the service category
of Mandap keeper, since the labour component alone is subject to the levy of
Service Tax.
15. In this regard, we have gone through the letter F.No. 176/1/2001-
CX(4) (Pt.) dated 31.3.2004, addressed to the Secretary General of
Federation of Hotel & Restaurant Association of India, and issued by Shri
S.K. Bhardwaj, the then Member of the Board, the scanned copy of which is
reproduced herein below, for better comprehension:
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From the above scanned image, it can very well be seen that, it was
not a circular in the manner being emphatically pleaded by the assessee, but
a letter specifically issued in response to the request of Federation of Hotel
Industry giving guidance in the matter. Further, vide 1st Para of the above
letter, I find that it was the demand of the Federation that an abatement of
40% may be granted on the gross value of convention services provided by
hotels towards the food and beverages supplied, as in the case of services
provided by mandap-keeper, for which an assurance was given to examine
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and to consider their request at appropriate time. Further, it was sought to
inform that in case goods and materials were sold by a service provider
during course of providing services, general exemption by way of
Notn.No.12/2003-ST dated 20.6.2003 "is presently available to the extent of
the value of such goods....".
16. Thus, what was sought to be informed was regarding a stop-gap
arrangement, till the request for an abatement of 40% on the gross value,
as sought by the Federation was provided, which came to be provided by
way of Notn No.1/2006-ST dated 1-3-2006. Moreover, it is also discernible
from the admission of the Federation of Hotel & Restaurant Association of
India that in providing Mandap Keeper Services along with catering,
approximately about 40% of the cost represents the value of the food and
beverages supplied while providing such taxable services of Mandap Keeper
Services.
17. We find from the calculation as appearing in Annexure-B forming part
of the SCN, that out of the total Gross value of Rs. 17,65,25,932/-
pertaining to the period 2010-11 to 30.6.2012, an amount of ,19,34 /-
represents the gross value of "Hall hiring charges collected and subjected to
assessment of Service Tax under the category of Mandap Keeper Service,
whereas, major amount of Rs. 16,45,91,205/- represents the gross value of
"Banquet/catering charges" collected towards serving of food & beverages,
but claimed as exempted from payment of Service Tax under
Notn.No.12/2013-ST. Thus, if the above amounts are converted in to
percentages, it is seen that as against 93.24% of the value representing
supply of food & beverages which has been claimed exempt by virtue of
Notn. No. 12/2003-ST, only a paltry amount representing 6.76% of the
Gross value charged from the clients have been subjected to levy of Service
Tax under the category of Mandap Keeper Services.
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17.1 Similarly, we find from the calculation as appearing in Annexure-D
forming part of the SCN, that out of the total Gross value of
Rs.8,17,74,316/- pertaining to the period 01.07.2012 to 11.04.2013, an
amount of Rs.33,18,264/- represents the gross value of "Hall hiring charges"
collected and subjected to assessment of Service Tax under the category of
Mandap Keeper Service, whereas, major amount of Rs.7,84,56,052/-
represents the gross value of "Banquet/catering charges" collected towards
serving of food & beverages, but claimed as exempted from payment of
Service Tax under Notn.No. 12/2013-ST. Thus, if the above amounts are
converted in to percentages, it is seen that as against 95.94% of the value
representing supply of food & beverages which has been claimed exempt by
virtue of Notn.No.12/2003-ST, only a paltry amount representing 4.05% of
the Gross value charged from the clients have been subjected to levy of
Service Tax under the category of Mandap Keeper Services.
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Hon'ble Supreme Court in case of Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi reported in (1979) 1 SCR 557 has held that serving of food or drinks by a restaurant to his customers does not partake of the character of sale of goods. Thus, the catering component of the Appellant's contract with their customer while rendering Mandap keeper service is service in which there is no object of sale of food and beverages and as such no sale of food and beverages is involved. In fact the food and beverages served to the guests of the customer while using the Mandap is consumed by them without transfer of possession of food and beverages from the Mandap keeper to his customer for some consideration. Just because a Mandap keeper charges a specified amount for serving food and beverages to the guests of its customers, that does not become sale of food and beverages, as the intention of the contract is providing service incidentally involving serving of food and drinks to the guests of the customer and the price charged for serving of food and drinks forms part of consideration of Mandap keeper service but not the price for sale of food and drinks.
6.1.2.2 Other than merely making a bald claim that the charges for food and drinks shown in the invoices represent the value of food and drinks only and do not include the service charges i.e. the charges for serving the food and drinks, no evidence in this regard could be produced by the appellant. If in 11 | P a g e ST/11315/2016-DB order to claim the exemption under Notification No. 12/03-S.T., the appellant claims 6.1.2.3 In view of the above discussion, we hold that there was no sale involved in the Appellant's transaction as Mandap keeper while serving their customers, for there is no sale of food and beverage as defined in Section 2(h) of the Central Excise Act, 1944 When there is no sale of any materials or goods, the exemption under Notification No. 12/03-S.T. would not apply. This exemption notification is inapplicable to indivisible service contracts like the present one in hand 6.1.3.1 As regard the third contention of the Appellant that value of food and beverages served in their case is more than 40% of the gross amount charged for service in relation to use of Mandap and abatement under Notification No. 21/97-5.T. and its successor Notification N 0. 1/06-ST. is 40% abatement of actual value of food and drinks has to be allowed under Notification No. 17/03-S.T., and disallowance of exemption under this notification would amount to levy of both Service tax by Central Government and Sales tax/VAT by the State Government on the same value, which is not permissible in view of Hon'ble Supreme Court's judgment in case of Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes (supra), such plea is untenable for the reason that field of taxation and power of taxation of Union and State is different. Different aspects of a transaction is taxed under different legislative entries. After carefully considering plea of the appellant, we are of the view that the same is devoid of merit for the following reasons:
(1) Hon'ble Supreme Court in case of Tamil Nadu Kalyana Mandapam Association v. Union of India (supra) while considering the validity of levy of Service tax by the Ceniral Government on the service in relation to use of Mandap, while dismissing the argument of the Appellants that Service tax by Central Government on catering services, a part of service in relation of use of Mandap, amounts to tax on sale and purchase of goods, and upholding the levy, held that the fact that sales tax on the supply of goods involved in the said service can be levied does not mean that a Service tax cannot be levied on the service aspect of catering. In this regard paras 42,43,44 and 45 are reproduced below
42. As far as the above point is concemed, it is well settled that for the tax to amount to a tax on sale of goods, it must amount to a sale according to the established concept of a sale in the law of contract or more precisely the Sale of Goods Act, 1930.
Legislature cannot enlargo the definition of sale so as to bring within the ambit of taxation transactions, which could not be a sale in law. The following judgments and the principles laid down therein can be very well applied to the case in hand.
1. M/s. J.K. Jute Mills Co. Ltd. v. The State of U.P. & Am, (1962) 2 SCR 1;
2. M/s. Cannon Dunkerley & Co. and Ors. v. State of Rajasthan & Ors., (1993) 1 SCC 364;
3. The State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd., (1959) SCR 379;
4. The Sales Tax Officer, Pilibhit v. M/s. Budh Prakash Jai Prakash [1955] 1 SCR 243;
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5. M/s. George Oakes (P) Ltd. v. State of Madras [1962] 2 SCR 570.
43. In regard to the submission made on Article 366(29A)(1), we are of the view that it does not provide to the contrary. It only permits the State to impose a tax on the supply of food and drink by whatever mode it may be made. It does not conceptually or otherwise include the supply to services within the definition of sale and purchase of goods. This is particularly apparent from the following phrase contained in the said sub-article "such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods". In other words, the operative words of the said sub-article is supply of goods and it is only supply of food and drinks and other articles for human consumption that is deemed to be a sale or purchase of goods.
44. The concept of catering admittedly includes the concept of rendering service. The fact that tax on the sale of the goods involved in the said service can be levied does not mean that a service tax cannot be levied on the service aspect of catering. Mr. Mohan Parasaran, leamed senior counsel for the appellant submitted that the High Court before applying the aspect theory laid down by this Court in the case of Federation of Hotel and Restaurant v. Union of India & Ors. (supra) ought to have appreciated that in that matter Article 366(29A)(f) of the Constitution was not considered which is of vital importance to the present matter and that the High Court ought to have differentiated the two matters. In reply, our attention was invited Paras 31 and 32 of the judgment of the High Court in which service aspect was distinguished from the supply aspect, In our view, reliance placed by the High Court on Federation of Hotel and Restaurant (supra) and, in particular, on the aspect theory is, therefore, apposite and should be upheld by this Court In view of this, the contention of the appellant on this aspect is not well founded
45. It is well settled that the measure of taxation cannot affect the nature of taxation and, therefore, the fact that Service tax is levied as a percentage of the gross charges for catering cannot alter or affect the legislative competence of Parliament in the matter."
Thus the plea that Service tax cannot be levied on the portion of value of Mandap Keeper Service which represents the value of food and beverages served is baseless In fact in paras 42 & 43 of the Apex Court judgment reproduced above it has been held in very clear terms that Article 366(294) (D only permits the states to impose a tax on the supply of food and drinks by whatever mode it may be made and it does not conceptually or otherwise includes the supply to services within the definition of sale and purchase of goods.
(2) In the case of Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes (supra), the assessee was providing "advertising Agency's service" and was paying Sales tax on goods used in providing the service by treating the same as deemed sale. The commercial tax department wanted to include the value of service portion also in the value of goods for the purpose of charging Sales tax which was not accepted by Hon'ble Supreme Court on the ground that accepting the commercial tax authority's plea would amount to extending the legal fiction beyond the purpose for which it was created. It is in this context that the Hon'ble Court observed that payment of Service tax and the VAT are mutually exclusive, as when Sales tax/VAT is charged on the value of goods used in an indivisible service contract involving use of goods in rendering of service by treating the goods supply as deemed sale under 13 | P a g e ST/11315/2016-DB Article 366(294) of the Constitution, Sales tax on such deemed sale can be charged only on the value of the goods, not on the entire value of the contract including the value of service portion, as doing so would amount to charging of tax on a service contract ie. service tax by the State Governments which they cannot do. But the position is different when charging Service tax on an indivisible service contract by Central Government where some goods have been used for performing the service. For charging tax on such indivisible service contract, no legal fiction is required-service tax is to be charged if the service is taxable on the measure as chosen by the legislature, as it is settled law that measure of a tax is independent of the nature of the tax. The Service tax can be charged on the gross amount charged for the service including the value of the goods used for providing the service. Therefore the observations of Hon'ble Supreme Court in case of Imagic Creative Pvt. Ltd. (supra) that payments of Service tax and VAT are mutually exclusive is in consonance with observation of the Apex Court in para 44 of its judgment in case of Tamil Nadu Kalyana Mandapam Association v. Union of India (supra).
6.2 It was pleaded by the Appellant that Notification No. 21/97-S.T. and its successor Notification 1/06-S.T. which are specific notifications meant for Mandap keepers have a condition that benefit of this exemption notification would not be available if the benefit of Notification No. 12/03-S.T. has been availed and this indicates that a Mandap Keeper has the option to avail the Notification No. 12/03-S.T. also.
6.2.1 As discussed above, serving of food and beverages for consideration to the guests of the customers in the course of use of Mandap is catering service, is not sale of food and beverages. If such a contract involves sale of food and beverages or any other goods or material, the evidence for the same has to be produced. As discussed in para 6.1.2.2 above, there was no evidence produced to show that there was a sale contract between the Appellant and its customers.
6.3 The Appellant relied on Tribunal's judgment in case of Sky Gourmet Pvt. Ltd. v. Commissioner of Service Tax, Bangalore reported on 2009/01)LCX0142 Eq 2009 (014) STR 0777 (Tri. - B * amg .) wherein it was held that in view of legal fiction of Article 366(29A)(f) of the Constitution, serving of food and beverages in c catering contract is sale of food and beverages for the purpose of Notification No. 12/03-S.T. But this judgment has not considered at all in the judgment of Hon'ble Supreme Court in case of Tamil Nadu Kalyana Mandapam Association v. Union of India (supra). In para 55 of the said judgment Hon'ble Court has held that service element is more weighty and predominant in outdoor catering and it cannot be considered as a case of sale of food and drinks as in a restaurant and also the observations in para 43 of the judgment reproduced above the Apex Court has held in clear terms that supply of food and drinks in a catering contract, which by virtue of Article 366(29A)(f) of the Constitution is deemed to be sale for the purpose of charging sales tax, cannot be treated as sale of goods for the purpose of Service tax. The Tribunal's judgment in case of Sky Gourmet Pvt. Ltd. v. Commissioner of Service Tax (supra), is therefore, per incurium and hence, the same is not a binding precedent. As regards the judgment of Hon'ble Delhi High Court in case of Indian Railways Catering & Tourism Corporation Ltd. (IRCTC Ltd.) v. Govt. ofNCT of Delhi & Others (supra) cited by the Appellant, on going through this judgment, we find that in this case, in para 39 of the judgment, Hon'ble Court has given a clear finding that providing of food, snacks and water to the passengers on board the trains is altogether different from outdoor catering service and Hon'ble 14 | P a g e ST/11315/2016-DB Supreme Court's judgment in case of Tamil Nadu Kalyana Mandapam Association v. Union of India (supra) is not applicable to providing of food, snacks and water to passengers on board the trains and the same is pure sale of goods. Thus the judgment of Hon'ble Delhi High Court in case of IRCTC v. Govt. of NCT of Delhi & Others (supra) cited by the Appellants is not applicable to the facts of the present case in hand.
6.4 In view of the above, we hold that there was no sale contract in the Appellant's contract as Mandap keeper for the purpose of levy of Service tax under Finance Act, 1994 and therefore exemption Notification No. 12/03-ST. is not available to the Appellant. They should have paid service tax after determining their liability on the basis of Notification No. 21 197-S.T. and its successor Notification No. 1/06-ST. if conditions of such notification are satisfied. Therefore, so far as appeal No. ST/374/08 and ST/399/09 is concerned, the service tax demands are correct on merits and so far as appeal No. ST7462/2010 is concerned, since in this case, even the Notification No. 1/06-ST. has been denied on the ground that input service credit has been availed and since the Appellant are ready to reverse the input service credit as prayed in the course of hearing, the tax demand has to be re-determined after permitting exemption under Notification No. 1/06- S.T. subject to condition that the Appellant reverses the Cenvat credit."
18 The A.R while reiterating order of the Commissioner as above, has also relied on the decision as reported in 2019 (26) G.S.T.L 71 (T-All.) in HOTEL KANHA SHYAM VS.COMMISSIONER OF C.EX. & S.T., ALLAHABAD and SAYAJI HOTELS LTD VS. COMMISSIONER OF C.EX., INDORE-2011 (24) STR 177 (Tri. - Del.))
19. Appellants on the other hand, inter alia, submit that that the issue under contest is whether the Appellant has correctly discharged full Service Tax on Hall Hire Charges, when full VAT stood paid on food sale component.
The revenue department on the other hand wishes to forcibly include both food and hall hire charges and compute Service Tax thereon, by granting abatement there from, under the category of Mandap Keeper Service. This is evident from Para 21 of the impugned order .
20. Though the impugned order heavily relies upon the decision in the case of Sayaji Hotels P. Ltd. 2011 (24) S.T.R. 177 (Tri. - Del.), however, a lot of water has flown under the bridge and the issue on hand is more or less settled by now, vide the following decisions:
15 | P a g e ST/11315/2016-DB M/s. Chokhi Dhani Resorts P. Ltd. 2017(12) TMI 1743- CESTAT New Delhi M/s. Chokhi Dhani Resorts P. Ltd. 2020(1) TMI 675- CESTAT New Delhi Chokhi Dhani Resorts (P) Ltd. 2018 (10) G.S.T.L. 30 (Tri. - Del.) Narmada Jackson Hotel vs. CCE, Bhopal- 2016 (43) STR $72 (Tri. Del.) M/s. Gola Five Star Banquet 2018(4) TMI 724- CESTAT New Delhi;
M/s. Cerebral Learning Solutions Pvt. Ltd 2013(4) TMI 527- CESTAT New Delhi- Para 4 thereof M/s. Hyatt Resorts P. Ltd 2019(4) TMI 179- CESTAT Chandigarh Daspalla Hotels (P) Ltd. 2010 (18) S.T.R. 75 (Tri. - Bang.) LSG Sky Chef India Pvt. Ltd. Vs. Commr. of Service Tax, Bangalore, 2010 (18) S.T.R. 37 (Tri. - Bang.) LSG Sky Chefs (India)(P) Ltd. 2017 (49) S.T.R. 286 (Kar.) Sky Gourmet Pvt. Ltd 2009 (14) S.T.R. 777 (Tri. - Bang.) Sky Gourmet Catering Private Limited 2011(4) TMI 1267-(Kar) Sky Gourmet Catering Private Limited 2011(4) TMI 451-(Kar)
21. That while deciding the above decision in the case of Sayaji Hotels Ltd.
(supra) the decision of the Tribunal in the case of Daspalla Hotels (P.) Ltd.
(supra) though quoted was not considered. That the subsequent decision of the Tribunal and the decision of Hon'ble Karknataka High Court in the case of LSG Sky Chefs (India) (P.) Ltd. (supra) fully covers the disputed issue in favour of the Appellant. Also, unlike the said case of Sayaji Hotels (supra), wherein at Para 6.1.2.2 and 6.2.1 it was held that in absence of any evidence, regarding VAT payment being necessitated and made on food sale value, such portion cannot be excluded from taxable value for Service Tax levy, the issue on hand stands on a different footing in light of VAT department certificate at Page no.250 of appeal paper book, in this regard.
22. Unlike a situation where the service provider simply does not pay any Service Tax at all by rendering service, and pays only VAT on food sale, in which circumstances, value of service has to be determined and taxed, in the present case, the service charges and sale price being charged separately and while service charges were subjected to Service Tax levy and 16 | P a g e ST/11315/2016-DB food sale charges were subjected to VAT admittedly, the various case laws referred to in the impugned order are clearly distinguishable.
23. The issue on hand is also otherwise covered vide the principle laid down in the case of Imagic Creative P. Ltd. 2008(9) STR 337(SC) as well as in the case of Munjaal Manish Bhatt 2022(62) GSTL 262 (Guj) - Para 96 to 100 thereof, and hence, the demand therefore cannot survive anyway.
24. The Appellant had always entertained a bonafide belief in this regard based on CBIC Clarification dt. 31.3.04 regarding non-levy of Service Tax on food sale component. Even the VAT authorities have certified that the Appellant had paid applicable VAT on food sale, as a result of which, the same cannot be subjected to levy of Service Tax once again.
25. Under the facts and circumstances of the case, even if there are divergent judicial views on the issue the whole of demand being issued beyond normal period of limitation, is anyway patently time-barred.
26. They further relied upon the following decisions:-
Safety Retreading Company (P) Ltd 2017(1) TMI 1110-SC M/s. Mohit Minerals Pvt. Ltd 2022(5) TMI 968-SC M/s. Total Environment Building Systems Pvt. Ltd 2022(8) TMI 16 SC M/s. Kone Elevator India Pvt. Ltd 2014(5) TMI 265-SC M/s. Larsen & Toubro Ltd & Others 2015(8) TMI 749-SC M/s. Ocean Interior Limited 2019 (11) TMI 124- CESTAT Chennai M/s. Ocean Interior Limited 2023(9) TMI 818-SC Haldiram Marketing Pvt. Ltd 2023(4) CENTAX 26 (Tri- Del) Haldiram Marketing Pvt. Ltd 2023(11) CENTAX 23 (SC) 26.1 Considered the rival submissions. We find that in the matter of M/S CHOKHI DHANI RESORTS P. LTD VS Principal COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX as reported in 2020 (1) TMI 675, CESTAT NEW DELHI, as well as earlier decisions of the same party as reported in 2017 (50) STR 168 (T) as well as 17 | P a g e ST/11315/2016-DB 2018 (10) GSTL 30 (Tri-Delhi), Tribunal has held that banquet and supply of food and beverages having been shown separately by different charges as banquet hall charges and similarly for food charges separately in relation to "Mandap Keeper"
services is permissible and does not disentitle benefit of Notification No. 12/2003- ST dated 28th June, 2003. In this context, para 2,3,4 of the aforesaid decision as reported in 2020 (1) TMI 675 (CESTAT New Delhi) in the matter of M/S CHOKHI DHANI RESORTS P. LTD VS PRINCIPLE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX is reproduced below:
"2. It has been the contention of the appellant that sale of food is being charged separately by them and on which they are discharging the VAT liability and the activity of the sale of food by no stretch of imagination can be called as a service. It has also been contended that it is not necessary for every customer who avail the Mandap Keeper Service to avail the catering service from the appellant. Both the activities are absolutely separate and, therefore, they are rightly claiming the benefit of Notification No. 12/2003 - ST dated 20 June 2003.
3. We have also heard learned Departmental Representative who has generally supported the findings given under impugned order-in-appeal.
4. Having heard both the sides, we find that matter is no longer res- integra as the issue has already been decided in appellant's own case vide final order No. 58729- 58730 of 2017 dated 15 December 2017. The relevant extract of the above decision is being reproduced here below :-
"4. We find that the impugned order has observed vide paragraph 6.4 that the appellant had also sold food to such persons, who were availing the facilities of Mandap associated with the Dhani. Thus, it is evident that the appellant had demonstrated the charges separately claimed for the mandap keeper service and for providing the catering service to the customers. Hence, the requirements of notification 12/2003 have been duly complied with and accordingly, the service tax demand cannot be confirmed by clubbing the value of food items sold during the course of providing "mandap keeper service". Therefore, we are of the view that the appellant should be entitled for benefit of notification 12/2003 - ST We find that this Tribunal in the appellant's own case vide Final Order No. 56060/2016 dated 23.12.2016 has allowed the benefit of notification no. 12/2003 - ST
5. In view of above, we do not find any merits in the impugned order. Accordingly, the same is set aside and the appeals are allowed in favour of the appellant".
18 | P a g e ST/11315/2016-DB 26.2 We find that the above decision is in consonance with the legal position in this case. We also find that not only the supply of food has been segregated but also appellants have discharged VAT tax on such food component and have also paid service Tax on Mandap keeper charges extracted from the parties and paid service tax on it. The constraint of separate contract emphasized in impugned order remains of no legal consequence, when supplier of service and service receiver indicate through invoice by implication that separation of both elements was agreed upon and accepted by both parties to the contract. We also find that earlier decisions both have gone in favor of the appellant as indicated above.
Therefore extended period cannot be invoked against the appellant, even if some contrary decisions existed too, as matter involves interpretation of law.
27. We therefore find merits in the submission made by the appellants on limitation and set aside the impugned order with consequent relief.
28. Appeal allowed.
(Pronounced in the open court on 09.01.2024) (SOMESH ARORA) MEMBER (JUDICIAL) (C.L. MAHAR) MEMBER (TECHNICAL) PRACHI