1. This appeal and application for stay have been filed in respect of the Order-in-Original No. 87/2007 dated 12.09.2007 passed by the Commissioner of Service Tax, Bangalore.
2. In terms of the impugned order the appellants are required to pre-deposit the following amounts: I. Rs. 58,04,581/- Service Tax demanded under Section 73(i) of the Finance Act 1994 for the period from 10.09.2004 to 31.03.2006.
IV. Penalty of Rs. 1000/- imposed for mis-declaration of value on taxable services 3. Shri G. Shivdass, learned Advocate, appeared on behalf of the appellant and Ms. Sudha Koka, learned SDR, appeared for the Revenue.
4. We heard both sides. The learned Advocate stated that the appellant is engaged in the business of preparation and supply of meals and snacks. In addition the appellant is engaged in wrapping and handling of food, loading and transportation of food trolleys, storage, handling and setup of catering equipment, storage and handling of dry stores other recycling items and cleaning of equipment, handling of waste, cabin service and laundry services. It was stated that the appellant supplied the food items to various Airlines. They are registered with the Service Tax Authorities under the category of "Out Door Caterer Services" with effect from 10.09.2004. They discharged Service Tax liability on the entire amount collected towards handling charges, delivery charges, hi - lift charges and bond handling charges. Revenue proceeded against the appellant on the ground that no Service Tax was collected or paid on account of supply of meals/food items to the Airlines. The appellant pays sales tax on the food items sold and they have records to show that sales tax has been paid. After adjudication the Commissioner passed the impugned order. The learned Advocate stated that the appellant is specifically covered by Clause (f) of Article 366(29-A) of the Constitution of India introduced vide 46th Amendment Act. It reads as follows: f. a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, 5. Subsequent to the above amendment of the Constitution, the definition of 'sale' has been incorporated with amendment which provides that supply of food as a part of any service would also amount to sale. Hence, the supply of the food by the appellant is subject matter of sales tax. As regards the amount received for the services rendered the appellant had already paid the service tax. Reliance was placed on the decision in the case of M/s. Idea Mobile Communications Ltd. - 2006 (4) STR 132 (Tri.-Del.) wherein the Hon'ble Tribunal has held that no service tax is payable when sales tax has already been paid. In the above decision, the Tribunal relied on the Apex Court's decision in the case of BSNL v. Union of India . Further the following case laws were also relied on.Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes 2008 (9) STR 337 (SC)BPL Mobile Communications Ltd. v. CCE Mumbai 2007 (7) STR 440(Tri.-Mum)ASL Motors Pvt. Ltd. v. CCE, Cus & ST, Patna 2008-TIOL-114 CESTAT-KOL f. Gerb Vibration Control Systems (P) Ltd. v. CST, Bangalore 2007 (7) STR 403 (Tri.-Bang) g. Glaxo Smithkline Asia Pvt. Ltd. v. Assessing Authority 2007 (8) STR 450 (Del) 5.1. The appellants are raising separate invoices for goods sold separately and services provided separately indicating sales tax or service tax as the case may be.
5.2. Supply of food and beverages to Airlines per se is not an activity of a out door caterer service has defined under the Act. Definition of out door caterer w.e.f. 16.06.2005 reads as follows: Outdoor caterer' 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.
5.3. The appellant is entitled to the benefit of Notification 12/2003 - ST dated 20.06.2003 which provides for deduction of the value of the goods and materials sold. Reliance is placed also on the following decision:Ad Labs v. CCE Bangalore 5.4. The miscellaneous expenses like amount collected from Airlines towards Bond rent, Airport fees, Customs fees, Customs clearance expenditure and scrap sales are available for abatement. Reliance is placed on the following decision: a) Trade Notice No. 5/98-Service Tax, dated 14.10.1998 of the Indore Commissionerate b) Scott Wilson Kirkpatrick (I) Pvt. Ltd. v. CST, Bangalore 2007 (5) STR 118 (Tri-Bang) c) Glaxo Smithkline v. Pharmaceuticals Ltd. v. CCE, Mumbai IV 2006 (3) STR 711 (Tri.-Mumbai)Sangamitra Services Agency v. CCE, Chennai 2007 (8) STR 233 (Tri.-Chennai) 5.5. Show cause notice indicates that the Service Tax paid by the appellant is Rs. 16,97,849/. However, the actual amount paid is Rs. 19,14,012/-.
5.5. The appellant is entitled to the benefit of treating the amount received from the customer inclusive of Service Tax payable (cum tax benefit). The following decisions were relied on: a) Sri Chakra Tyres reported in 1999 (108) ELT 361 affirmed in 2002 (142) ELT A279 (SC) c) Rajmahal Hotel v. Commissioner of Central Excise, Jaipur 2006 (4) STR 370 (Tri.-Del.)Panther Detective Services v. CCE, Kanpur 2006 (4) STR 116 (Tri.-Del.) 5.6. The show cause notice has invoked extended period of limitation.
This is not justified as there is no fraud, willful misstatement, collusion or suppression of facts with intent to evade service tax.
Following case relied on:Continental Foundation Joint Venture Sholding, Nathpa H.P. v. Commissioner of Central Excise, Chandigarh I 5.8. When no Service Tax is payable the question of interest under Section 75 and penalties under Section 76, 77 and 79 of the Act, does not arise. Section 80 provides that no penalty shall be imposable on the assessee for any failure if the assessee proves that there was reasonable cause of the said failure. Thus, the Act statutorily provides for waiver of the penalty. The following decisions are relied on.Tamil Nadu Kalyana Mandapam Assn. v. Union of India 2006 (3) STR 260 (SC) : 2004 (167) ELT 3(SC) b) Saj Flight Services (P) Ltd. v. Superintendent of Central Excise 2006 (4) STR 429 (Ker.) : 2006 (200) CTR (Ker.) 591-ED 7. The learned SDR further invited our attention to the CBEC's clarification dated 25.07.1997 with regard to out door caterers.
Particularly he emphasized that Notification No. 30/97 - ST provides for abatement of 50% of the total amount charged subject to the condition that the bills issued in this regard indicate clearly that it is inclusive of the coast of food, eatables, etc. The SDR pointed out that when the Notification provides for abatement of 50%, the appellant cannot claim deduction for the entire coast of the food and beverages supplied.
8. The learned Advocate counted the argument of the learned SDR saying that the decisions cited by the learned SDR relate to the leviability of Service Tax on Caterers. As far as the present appeal is concerned, the appellants do not challenge the levy. The dispute is only with regard to the correct valuation of the amount for purposes of service tax. As regards the exemption Notification it is for the appellants to avail of it or not. When the actual cost of food and beverage is available, there is no need for paying service tax for the amounts received on account of their sale especially when sales tax has also been paid.
9. On a very careful consideration of the entire issue, we find that the dispute involves amount the service tax liability on the amount received by way of sale of food and beverages to the Airlines. In view of the various decisions cited (supra) by the learned Advocate prima facie the case is in favour of the appellants. We also do not find that there is any suppression of facts to invoke the longer period. In view of this, we order waiver of pre-deposit of the entire tax demanded, interest and also the penalties. All recovery proceedings are stayed till the disposal of the appeal. As the amount involved is huge matter to come up for hearing on 09.07.2008.