Haldiram Marketing Pvt. Ltd. Vs Commissioner, Central Goods and Service Tax (CESTAT Delhi)
The CESTAT, New Delhi in Haldiram Marketing Pvt. Ltd. v. Commissioner, Central Goods and Service Tax [Service Tax Appeal No. 51555 of 2022 dated February 13, 2023] has set aside the demand order passed by the Revenue Department. Held that, no Service Tax can be levied on the activity of take-away of food items as it would amount to sale of goods wherein, element of service such as dining facility, washing area and clearing of the tables are not involved. Further held that, permitting an associated enterprise to use a part of the premises for the sale of its product would not amount to sub-letting and would be considered as sharing of expenditure, which cannot be treated as service.
Facts:
Haldiram Marketing Pvt. Ltd. (“the Appellant”) is engaged in running food outlets where customers can either purchase packaged foods like sweets or namkeen or avail restaurant dining facilities. Further, the Appellant also provides the facility of ‘take-away’ of food items. An audit of the Appellant was conducted and it was noticed that the Appellant had failed to pay due Service Tax on the activity of takeaway of food items as well as on the share of rent received from the associated enterprise.
Consequently, a Show Cause Notice dated September 28, 2020 (“the Impugned SCN”) was issued proposing Service Tax demand of INR 23,09,45,317/- with interests and penalties. The Appellant had submitted a reply to the Impugned SCN asserting that it was not required to pay Service Tax on the activities and, therefore, the Impugned SCN should be dropped. However, the Assessing Authority passed an Order dated March 11, 2022 (“the Impugned Order”) confirming the demand of INR 20,12,46,762/- with interest and penalties and the demand of INR 2,96,98,555/- was dropped on account of cum-tax benefit.
Being aggrieved, this appeal has been filed.
The Petitioner contended that the transaction involving supply of goods on take-away basis is a pure sale transaction and does not entail any service element rendered to customers and hence, would be outside the purview of Service Tax. Further that, no Service Tax can be levied on the amount received from associated enterprise as it is towards sharing of space. Further, the Impugned SCN as well as the Impugned Order invoked obsolete provisions, thus, the demand cannot be sustained.
Issues:
1. Whether the take-away of food provided by the Appellant be liable to Service Tax?
2. Whether permitting an associated enterprise to use a part of the premises for the sale of the product would amount to sub-letting and, therefore, the consideration received would be leviable to Service Tax?
Held:
The CESTAT, New Delhi in Service Tax Appeal No. 51555 of 2022 held as under:
