F. No. B.43/8/97-TRU
Ministry of Finance
Department of Revenue
Tax Research Unit
New Delhi, dated the 25th July, 1997
To
All Chief Commissioners of Central Excise and Customs
All Commissioners of Central Excise and Customs
Sir,
Sub: Service Tax on Outdoor Caterers and Pandal or Shamiana operators
I am directed to invite your attention to Section 88 of the Finance Act, 1997 which, inter-alia provides for levy of service tax on the services rendered by outdoor caterers and pandal or shamiana contractors. It has been decided to bring the above services under the service tax net with effect from 1st August, 1997. Notification Nos. 28/97-ST to 35/97, all dated the 25th July 1997 have been issued in this regard (copies enclosed).
2. OUTDOOR CATERERS:
2.1 As per Section 88 of the Finance Act, 1997, caterer has been defined to mean 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 or occasion and an outdoor caterer has been defined as a caterer engaged in providing services in connection with catering at a place other than his own.
2.2 Further, the taxable service rendered by an ‘outdoor caterer’ means any service provided to a client by an outdoor caterer. The service tax is chargeable to the rate of 5% and the value of the taxable service in relation to service provided by an outdoor caterer to a client, is the gross amount charged by such caterer from the client for services in relation to such catering including the charges for good, edible preparations, alcoholic o9r non-alcoholic beverages or crockery and similar articles or accoutrements for any purpose or on any occasion. In cases where the outdoor caterer provides services of catering including supply of food an abatement of 50% of the total amount charged has been provided (Notification No. 30/97-ST refers) subject to the condition that the bills issued in this regard indicate clearly that it is inclusive of the coast of food, eatables, etc.
2.3 In case of catering services provided in the premises of an office, factory or similar establishments by a caterer who is also based/located within such premises, taxable service in excess of twenty per cent of the gross amount charged from the client for such services is exempted (Notification No. 31/97-ST refers). In other words, service tax effectively payable will be 1% of the gross bill charged to the client by the outdoor caterer in such cases. These also cover industrial caterers who provide catering under contract on an annual/periodical basis and where the cooking/catering is done at the premises of the industry or factory. However catering provided in hospitals, medical institutes, schools, colleges and other academic institutions has been exempted from the levy of service tax (Notification N. 32/97-ST refers).
2.4 In the case of catering provided in trains by the Railways service tax has been exempted vide Notification No. 33/97-ST. Service Tax will however be attracted on inflight catering services provided to the airlines by catering contractors/star hotels etc.
3. PANDAL OR SHAMIANA CONTRACTORS
3.1 As per Section 88 of the Finance Act, 1997, ‘pandal or shamiana’ means a place specially prepared or arranged for organizing an official, social or business function and a ‘pandal or shamiana contractor’ means a person engaged in providing any service, either directly or indirectly, in connection with the preparation, arrangement, erection or decoration of a pandal or shamiana and includes the supply of furniture, fixture, lights and lighting fittings, floor coverings and other articles for use therein;
3.2 The taxable service rendered by a pandal or shamiana contractor means any service to a client, by a pandal or Shamiana contractor in relation to a pandal or shamiana in any manner and also includes the services, if any, rendered as a caterer. The rate of service tax is 5% and the value of taxable service in relation to service provided by a pandal or shamiana contractor to a client, is the gross amount charged by such contractor from the client for services in relation to the setting up of a pandal or shamiana including the supply of furniture, fixtures, lights and lighting fittings, floor coverings and other articles used therein also the charged for catering, if any. In cases where the pandal contractor also provides services of catering and charges the customer on lumpsum basis an abatement of 30% of the total amount charged could be given for the purposes of the service tax. In other words, service tax would be leviable on 70% of the total amount charged in such cases (Notification No. 34/97-ST refers).
3.3 Service Tax levy on services rendered by pandal or shamiana contractors based in rural areas and who are carrying their business within such area has been exempted (Notification N. 35/97-ST refers). For the purpose of this exemption the expression rural areas means the area comprised in any village, and includes the area comprised in any town, the population of which does not exceed twenty thousand or such other figure as the Central Government may specify from time to time.
3.4 Where the pandal contractor provides free services, say for religious events, there will be no tax liability. Similarly in the cases of cancellation of the booking made by the client no service rendered and hence there shall be nil service tax liability.
4. General
4.1 As per section 69 of the Finance Act, 1994 read with rules 3 & 4 of the Service Tax Rules, 1994, every person responsible for collecting of the service tax is required to be registered with the concerned Central Excise Officer appointed under Rule 3. Notification No. 29/97-ST, dated 25.7.97 amends rule 2 of the said rules so as to prescribe that the person responsible for collecting the service tax in relation to the services provided by an outdoor caterer shall be outdoor caterer who raises the bill for such services rendered to a client and the person responsible for collecting the service tax in relation to services provided by the pandal or shamiana contractor shall be the pandal or shamiana contractor who raises the bill for such services rendered to a client.
4.2 Rules relating to levy of service tax on other services are already in existence. The Board desires that –the Commissioners should issue suitable notices today itself for information and guidance of the trade. The Trade notices may include the procedure to be followed for the registration, maintenance of documents, filing of returns and manner in which the service tax is to be paid. The Trade Notices should provide complete information and guidance to the new assessees and they should be self contained in all respects. The Commissioners are requested also to kindly incorporate the provisions of Chapter V of the Finance Act, 1994 as amended by Finance Act, 1997 and also copies of Service Tax Rules, 1994 (incorporating all the amendments), form of challans, TR-6, etc. in the Trade Notice, Heads of Accounts for payment of service tax on the above services will be intimated in due course. The intention is to provide complete guidance to the new assesses so that all relevant information is made available to them at one place. The field officers are also requested to kindly provide all assistance and guidance to the new assesses in explaining the provisions of service tax and in clarifying their doubts. All possible steps may kindly be taken by the Commissioners to facilitate smooth implementation of the imposition of service tax on the above services.
4.3 The Commissioners are requested to give wide publicity to the fact that the service tax on the above two services will come into force from 1st August, 1997. They should also give suitable publicity through newspapers and through the associations of trade immediately to apprise them about the provisions of law and procedures to be followed.
4.4 It has been decided that for all the Commissionerates, the concerned Commissioner having jurisdiction in central excise matters will have corresponding jurisdiction for service tax matters. This applies to commissionerates in Mumbai and Calcutta as well. (Order N. 5/1/97-Service Tax (3) dated 25th July, 1997 refers).
Yours Faithfully,
Sd/-
(T. R. Rustagi)
Tel: 3012687
