Services rendered by mandap keepers as caterer would also be liable to service tax - food charges collected from customers includible in value for discharging ST – Pre-deposit ordered: CESTAT
By TIOL News Service
MUMBAI, APRIL 17, 2013: THE appellant is registered with the department under the category of ‘Mandap Keeper Service'. While rendering ‘Mandap Keeper Services' they were also providing catering services. However, they split the charges for the services rendered into two parts. One was for ‘hall charges' which was towards temporary usage of the banquet hall for conducting the function and the other is for supply of food. Incidentally, they discharged the service tax liability on the ‘hall charges' collected from the customers.
However, they did not pay service tax on the food charges collected from the customers on the ground that the transaction is one of sale of food and, therefore, service tax is not leviable; that food is exempt from sales tax.
On these food charges, demand notices were issued for the period from 2005-06 to 2009-10 and up to 30/09/2011.
All these demand notices totaling Service Tax in excess of Rs.1.56 crores were confirmed by the CCE, Nagpur along with imposition of penalty and interest.
Before the CESTAT with a Stay application, the appellant submitted as under -
+ they charge for the catering done separately by way of food charges on which they are discharging VAT liability and sale of food is not rendering of any service and, therefore, the said activity does not attract service tax liability.
+ Reliance is placed on the decisions in Daspalla Hotels Ltd. 2010-TIOL-219-CESTAT-BANG and the decision of the Karnataka High Court in the case of Sky Gourmet Catering Pvt. Ltd.
+ in their own case vide order dated 30/03/2010, the Jt. Commissioner of Central Excise has accepted their contention that they are liable to pay service only on the amount received in respect of hall charges.
+ the entire transaction was known to the department and, therefore, invocation of extended period of time to confirm the demand is not sustainable.
The Revenue representative placed reliance on the decisions in Tamil Nadu Kalyana Mandapam Assn. 2004-TIOL-36-SC-ST & Sayaji Hotels Ltd. vs. Commissioner of Central Excise, Indore 2011-TIOL-226-CESTAT-DEL to negate the case laws relied upon by the appellant. As for limitation issue, the Revenue representative submitted that the SCN dated 22/07/2011 is for the normal period only and with respect to show cause notice dated 15/11/2010, the demand for October 2009 to March, 2010 would fall within the normal period. He pleaded that the appellant be put to terms with respect to the service tax demand covered within the normal period of time.
The Bench observed –
"6.1 As per Section 65(41) of Finance Act, 1994, the taxable service relating to ‘Mandap Keeper' is defined as follows:
“(41) (p) ‘Taxable Service' means any service provided to a client, by a mandap-keeper in relation to the use of a mandap in any manner including the facilities provided to the client in relation to such use and also the services, if any, rendered as a caterer.”
As per Section 65(10) caterer means:
‘''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”
6.2 These two clauses were considered extensively and discussed by the hon'ble apex Court in the case of Tamil Nadu Kalyana Mandapam Assn (supra) and the hon'ble apex Court in para 55 and 57 thereof held as follows:
“x x x”
6.3 From the above decision of the hon'ble apex Court, it is clear that the services rendered by the mandap keepers as caterer would also be liable to service tax under the category of ‘Mandap Keeper Services'. The decision relied upon by the consultant on the hon'ble High Court of Karnataka is with reference to ‘Outdoor Catering Services' rendered in an aero plane and the other decision of the Tribunal in the case of Daspalla Hotels Ltd it is in respect of evidence relied upon by the appellant with regard to VAT paid on the value of food and beverages sought to be taxed under ‘Convention Services'. In the present case, the demand is not under any of these services but on ‘Mandap Keeper Service' and as can be seen from the decision of the hon'ble apex Court in the case of Tamil Nadu Kalyana Mandapam Assn. (supra), service tax liability is attracted in case the mandap keeper also performs catering services. Therefore, we are of the considered view that the appellant has not made out a case for 100% waiver of pre-deposit of the dues adjudged against him. As regards time bar aspect, this issue is both a question of fact and law and, therefore, can be gone into at the time of final hearing of the appeal.”
Noting that the service tax demand for the normal period is approximately Rs.53 lakhs, the Bench directed the appellant to pay the same as pre-deposit and report compliance for obtaining Stay.
(See 2013-TIOL-616-CESTAT-MUM)
