Custom, Excise & Service Tax Tribunal
Express Food Services vs Bhopal on 8 April, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH, COURT NO. 4
SERVICE TAX APPEAL NO. 51697 OF 2019
[Arising out of Order-in-Appeal No.BHO-EXCUS-001-APP-342-18-19 dated 28th
January, 2019 passed by the Joint Commissioner CGST, Customs and Central
Excise, Bhopal (M.P.)]
EXPRESS FOOD SERVICES Appellant
526, Arya Nagar,
Near Vishwanath Cinema,
Suraj Ganj Itarsi,
Madhya Pradesh - 461111.
Vs.
COMMISSIONER OF CGST &
Respondent
CENTRAL EXCISE-BHOPAL 35-CGST Bhawan Administrative Area, Arera Hills, Jail Road, Bhopal, Madhya Pradesh - 462015.
Appearance:
Present for the Appellant : None Present for the Respondent: Mr. Shashank Yadav, Authorised Representative CORAM:
HON'BLE DR. RACHNA GUIPTA, MEMBER ( JUDICIAL) HON'BLE MRS. HEMAMBIKA R. PRIYA, MEMBER ( TECHNICAL ) Date of Hearing / Decision : 08/04/2025 FINAL ORDER NO. 50541/2025 DR. RACHNA GUIPTA None is present for the appellant. Perusal of file reveals that the appellant has failed to appear despite the warning of last opportunity. In the given circumstances, we refrain ourself to adjourn the matter any further.
We have heard the department.2
ST/51697 /2019
2. Ld. Departmental Representative has mentioned that the issue involved in the present appeal is with respect to inclusion of license fee paid by the caterer for providing catering service on board to Railway passenger to be taxable, is no more res-integra. Decision in the case of M/s. Ambuj Hotels & Real Estate Pvt. Ltd. Vs. Director General of GST Intelligence reported in 2023 (4) TMI 322 - CESTAT, New Delhi, is brought to our notice. However, impressing upon no infirmity in the impugned Order, same is prayed to be upheld and the appeal is prayed to be dismissed.
3. Having heard ld. Departmental Representative and perusing the record of appeal including the grounds of appeal and decision in the case of M/s. Ambuj Hotels & Real Estate Pvt. Ltd. (supra), we observe and hold as follows:-
The appellant herein is engaged in the business of sale of packaged foods and other cooked articles and beverages at railway platforms as well as in the trains and is registered for rendering the service under the category of Outdoor Catering Service and the restaurant service. Since the activity is not covered under any clause of section 66 D of the Finance Act, 1994 and the period involved is the post insertion of the said section i.e. from 2012-13 to 2015-16 that the activity was opined to be the taxable service. Hence the department served a Show Cause Notice No.07/2016 dated 25.04.2018 by invoking the extended period of limitation to the appellant proposing the recovery of Service Tax amounting to Rs.1,94,53,762/-alongwith the interest at the appropriate rate and the penalties to be imposed under section 76 and 78 of Finance Act 1994. The said proposal has been confirmed by the original adjudicating authority vide 3 ST/51697 /2019 Order-in Original No.19/2018 dated 31st August, 2018, with the observations as follows:-
"It is also find that S&H Ed. Cess is mistakenly mentioned Rs. 1,14,4736/- instead of Rs. 1,14,736/- in show cause notice. As per calculation of Education Cess shown in show cause notice is worked out Rs. 2,29,472/-which is 2% of respective service tax, hence S&H Ed. Cess is to be works out Rs. 114736/- which is 1% of the same respective service tax. Further, the total amount of service tax demanded is mistakenly worked out Rs. 1,94,53,762/-. However, on being simple summed up the amount of Service tax and cesses shown in show cause notice, the total amount of service tax demanded is worked out to Rs. 1,95,01,290/- (Service Tax Rs. 1,87,73,915/- + Education Cess Rs. 2,29,472/- + S&H Ed. Cess Rs. 1,14,736/-+Swachh Bharat Cess Rs.2,17,625/-+Krishi Kalyan Cess Rs. 1,65,542/-)."
The said order has been modified by Commissioner (Appeals) vide Order-in-Appeal No.342-18-19 dated 24.01.2019 as follows:-
"There is no discretion in the matter of imposition of penalty. As it was a clear case of suppression, penalty under Section 78 is imposable. In view of the above, the demand of service tax of Rs. 50,98,356/- for the period 2016-2017 confirmed by adjudicating authority is upheld along with interest and equal mandatory penalty of Rs. 50,98,356/-. The balance demand of Rs. 1,43,55,406/- for the period 2013-14 to 2015-2016 is hereby set aside along with interest and penalty."
Being aggrieved the present appeal was filed by the appellant. However, the appellant has failed to pursue the same. 4
ST/51697 /2019 We have perused the decision relied upon by the Department. It is observed that the issue adjudicated vide the said decision is the same as involved in the present appeal i.e. a. Whether Service tax on the license fee paid by the appellant to the Railways under section 73(2) of the Finance Act, 1994 is leviable to tax.
It is held in the said case as under:-
"28. It clearly transpires that the license fee is based solely on the assessed sales turnover. It cannot be said that the license fee is quid pro quo for any support offered by the Railways. It also needs to be noted that license fee is paid as consideration for the service provided by the Railways to the appellant by way of grant of the authorization to provide catering service on the train. This would be clear from the bid document and the relevant portion is reproduced:
"1.3.12 In consideration of the award of the License to the Licensee, the Licensee shall be liable to pay License Fee to Railway which shall be more than minimum license fee determined by Railway apart from the Security Deposit. The licensee shall submit the bill for providing on-board catering services on 10 days basis and the 90% of the payment will be settled based on the provisional bills while the final bills along with train occupancy certificate issued for each trip by the Train Superintendent will be settled on monthly basis. Railway will make payment of such amounts after due verification. In addition, Railway will make mandatory deductions for tax at source or any other deductions in respect of catering services.
1.3.13 In consideration of the award of the License to the Licensee, the Licensee shall be liable to pay License Fee to Railway which shall be more than minimum license fee determined by Railway. The entire License Fee shall be payable in advance 2+2+1yearly basis. The License Fee for the first 2 years will be payable fifteen (15 days) prior to commencement of the License at the beginning of license and the license fee for the second 2 years shall be paid within fifteen (15 days) after completion of first two years of the contract subsequently the license fee for the 5th year shall be paid with n fifteen (15 days) after completion of the 4th year of the license. In case of renewal for another period of 5 years, the same procedure shall be followed for payment of license fee. The licensee shall submit the bill for providing on-board catering services on monthly basis, along with train 5 ST/51697 /2019 occupancy certificate issued for each trip by the Train Superintendent. Railway will make payment of such amounts after due verification. In addition, Railway will make mandatory deductions for tax at source or any other deductions in respect of catering services."
29. The limited question that arises for consideration is whether the activity identified in the show cause notice qualifies to be a taxable service for which the license fee is said to be the consideration. The demand of tax in the show cause notice is on support services. However, the consideration paid as license fee is not linked with such support. When the activity identified to be taxed in the show cause notice is found to be non-taxable, the demand proposed in the show cause notice cannot sustain as was held by the Madras High Court in R. Ramadas vs. Joint Commissioner of Central Excise, Puducherry - 2021 (44) G.S.T.L. 258 (Mad.). In Commissioner of Central Excise, Nagpur vs. M/s. Ballarpur Industries Ltd. - 2007 (215) E.L.T. 489 (SC) , the Supreme Court held that what is not invoked in the show cause notice cannot be examined in proceedings arising from the said notice. As noticed above, the demand on "grant of license" was not invoked in the show cause notice.
30. The license fee is the consideration paid for the „grant of license‟. It is pertinent to note that the words "license fee" is defined the Oxford Dictionary to mean "a fee paid to an organization for permission to own, use or do something." The Supreme Court in State of Orissa vs. Narain Prasad - (1996) 5 SCC 740 explained the meaning of expression "Privilege" and held that "Privilege really means the license or permit granted by the State". In the instant case, the license fee paid by the appellant to Railways is the consideration for the privilege to be the sole catering agent on board the trains for which a license was issued. This "grant of license/privilege" is the service which was taxable and the value of this service is equal to the license fee which is the consideration paid for this service. The show cause notice has not identified this service. To tax this service would, therefore, result in going beyond the scope to the show cause notice.
31. There is, therefore, merit in the contention advanced by the learned counsel for the appellant that the consideration paid by the appellant as license fee cannot be subjected to levy of service tax. The other two 6 ST/51697 /2019 demands proposed in the show cause notice and confirmed by the adjudicating authority have not been contested by the appellant.
32. Thus, the impugned order dated 15.10.2018 in so far as it confirms the demand of service tax on the license fee paid by the appellant to the Railways with interest and penalty is set aside and the appeal is allowed to this extent."
5. Perusal of the order reveals that the issue as framed above has been decided by this Tribunal in favour of the assessee. Even Commissioner (Appeals) has dropped the demand of Rs.1,43,55,406/- for the period 2013- 14 to 2015-16 alongwith interest and penalty on this issue while relying upon several decisions with reference to support services. The balance demand of Rs.50,98,356/- for the period 2016-17 has been confirmed based on the amendment in the notification No.30/2012 dated 20.06.2012 but once the amount of licence fee paid itself is denied to be the consideration towards taxable service, question of any liability of appellant, service provider under Reverse charge mechanism (Notification No.30/2012) doesn't at all arises. The partial demand confirmed is also about the catering service being rendered by the appellant. Hence the confirmation of partial demand by Commissioner (Appeals) is also not sustainable. Therefore, the Order-in- Appeal dated 24.01.2019 is hereby set aside. Consequently, the appeal is allowed.
[Dictated & Pronounced in the open Court] (DR. RACHNA GUIPTA) MEMBER ( JUDICIAL ) (HEMAMBIKA R. PRIYA) MEMBER ( TECHNICAL ) Anita