By TIOL News Service

MUMBAI, SEPT 15, 2016: THE issue involved is regarding the demand of service tax liability on the appellant for the period March 2006 to March 2011 under the category of "outdoor catering services".

The lower authorities concluded that appellants are liable to service tax as they are engaged in providing Mid Day Meals to various schools and are getting paid for the same from the Schools/Government.

The appellants contested the matter before lower authorities on merits on the ground that the School/Govt. organization is not providing any infrastructure, necessary utensils, arrangement for water and sitting arrangements;that Appellants themselves are cooking and supplying which is outright sale to the Govt. and there is no service component.

The Bench observed that an identical issue had came for consideration before the Principal Bench of the Tribunal in the case of Ambedkar Institute of Hotel Management - 2015-TIOL-1593-CESTAT-DEL and the Tribunal after analyzing the provisions to Section 65(76a) and 73 of the Finance Act, 1994 come to a conclusion that the service tax liability does not arise on the appellant therein for preparing and supplying food under Mid Day Meal Scheme.

Paragraph 6 of the cited decision is reproduced below -

“6… The service which is covered under Section 65(105)(zzt) is the service provided or to be provided to any person by an "outdoor caterer" and not by any caterer. The outdoor caterer as defined in Section 65(76a) means a caterer engaged in providing services in connection with catering at a place other than his own but including a place provided by way of tenancy or otherwise by the person receiving such services. Since the appellant are preparing mid day meals in their Institute and not in the schools where the meals are served and are not involved in serving of the meals in any manner, in our view they are not covered by the definition of "outdoor caterer" and hence their activity of preparing and supplying meals for mid day scheme would not be covered by the definition of taxable service under Section 65(106(zzt). Accordingly the duty demand on this count would not be sustainable."

Holding that the impugned orders are unsustainable, the same were set aside and the appeals were allowed.

(See 2016-TIOL-2412-CESTAT-MUM)