By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Outdoor catering services – Whether value of goods can be deducted from the gross consideration charged for the purposes of calculating service tax liability – Notification No.12/2003 STHeld, similar facts were covered by judgment in case of Sky Gourmet Catering – Yes
Facts:
The respondent was engaged in providing catering services falling under “outdoor catering services”. The respondent paid service tax after deducting value of food and beverages and thus availing benefit under Notification No.12/2003, instead of availing abatement. The department denied the same on the ground that service tax needs to be paid on the gross amount collected and Notification No.12/2003 is not available to the respondent. The respondent argued on the basis of the judgment of the Apex Court in case of BSNL 2 STR 161 (SC) and relying upon the same, the Tribunal passed order in their favour. However, the Revenue filed appeal against the said order.
Held:
Referring to respondent’s own case, i.e. Sky Gourmet Catering Pvt. Ltd. v. Commissioner in writ Appeal no. 671-726 dated 18/04/2011 on the identical issue the appeal was disposed off. The Court held that the respondent is eligible to claim deduction in respect of goods portion while discharging the service tax liability as in the said writ, the case was examined with detailed consideration and relying on various Supreme Court judgments, the Division Bench concluded that outdoor catering contract has to be treated as composite contract under Article 366 – Clause 20A(f) of the Constitution of India and the State legislature is competent to levy sales tax on the sale aspect only i.e. the value of food. The remaining aspect including transportation is to be treated as service and service tax accordingly would be levied on service aspect and sales tax is payable on deemed sale aspect. Consequently, the substantial question of law was answered in favour of the assessee.
