By D B B SHARMA

THE word food is generally understood as any solid substance (as opposed to liquid) that is used as a source of nourishment. But, the definition for “food” given in the service tax notifications - 21/97, 12/2001, 20/2004, 22/2004 - differs from this general meaning of food. These notifications seek to give abatement to Mandap Keeper/shamiana or pandal supplier/outdoor caterer, when food is supplied along with Mandap/shamiana/catering. The word food is defined in the said notifications under explanatory part of the notification as follows:
 
Explanation - for the purpose of this notification, the expression “ food” means a substantial and satisfying meal.
 
A doubt may raise, because of the above definition given for food in the notifications, whether the exemption is applicable if the hotel or mandap keeper supplies only snacks like samosa, dosa, biscuits or any other light eatables - along with mandaps. This is because these snacks cannot be considered as meal in general understanding even if the quantities are served to the satisfaction of the guests or client.
 
This kind of situation normally happens in case of hotels, where  the clients would prefer to have only snacks, if any meetings or conferences timing does not fall during lunch or dinner hours and in cases where the budget for such meeting is minimal.
 
If the wordings of the notification are strictly interpreted, then the abatement or exemption under Notification. No.12/2001 (which existed in case of hotels during the period 20.12.2001 to 8.07.2004) is not applicable, if snacks are supplied along with mandap, inasmuch as snacks are not ‘food’ as per the notification! If you say this to any hotelwala, he may laugh at you, but you can’t help.
 
Further, the notification 12/2001 dt. 20.12.2001, completely exempts hotels from paying service tax if “food” is supplied along with mandap. There is every possibility that hotels, which have provided only snacks along with mandap, during the period 20.12.2001 to 8.07.2004, have availed full exemption under the notification No.12/2001 dt.21/12/2001 though they are not eligible for such exemption becuase the food (snacks) they served is not “food” as per the notification. This is because so far as hotels are concerned anything (other than a liquid) supplied is a food, and it will be a shock to the F&B Manager of the hotel, if we try to argue that a somosa supplied is not a food. It will be an interesting audit point.
                  
Another funny aspect of the notification is the words “substantial and satisfying” appearing in the definition of food. The aspect of “substantiality and satisfaction” is something subjective, then, how can they be objectively verified in order to see whether the conditions of the notification are fulfilled.
 
Don’t get surprised if one-day, central excise sleuths suddenly appear in your party being celebrated in a hotel, and try to ascertain from the guests whether the food served is substantial and satisfying. Of course, the aim is not to harass, but to plug the revenue leakage.
 
Tail piece:
 
The Supreme Court, while disposing (through its order dt.2.8.2004) the case challenging the banning of sale of gutka, pan masala, by State of Maharastra & Andhra Pradesh, has interpreted that gutka, pan masala as food by making following observations:
 
“We are, therefore, unable to agree with the contention that pan masala or gutka does not amount to "food" within the meaning of definition in Section 2(v) of the Act”.  (Prevention of Food Adulteration Act, 1954)
 
The Apex court held that the State Government is not vested with powers to ban sale under the Prevention of Food Adulteration Act, 1954, as the power to impose total ban on any food or consumable item under the said Act is rested entirely with the Union Government.
 
So when pan masala could be food, why not a samosa or dosa?

(The author is working as Superintendent of Central Excise and the views expressed are strictly personal )