N Kumar Associates International Vs Commissioner of Service Tax (CESTAT Mumbai)
CESTAT Mumbai held that the catering service provided to the students in the educational institution qualify for service tax exemption as per the notification no. 25/2012-ST dated 20.06.2012.
Facts- The assessee appellant is engaged in providing taxable service under the category of ‘outdoor catering’ service, defined u/s. 65(76a) r.w.s. 65(105)(zzt) of the Finance Act, 1994. During the disputed period, the appellant had entered into the agreements with Indian Institute of Technology (IIT), Kanpur for providing the mess services.
Based on the investigation, the department had initiated show cause proceedings against the assessee-appellant, seeking for confirmation of the service tax on provision of the taxable service i.e., outdoor catering services. Adjudicating authority confirmed service tax demand along with interest and penalty. Being aggrieved, the present appeal is filed.
Conclusion- The Hon’ble Supreme Court in the case Commissioner of Central Excise, Allahabad Vs. Surcoat Paints (P) Ltd., reported in 2008 (232) E.L.T. 4 (S.C) has held that once the department accepts the nonpayment of taxes in any one case, then it cannot agitate the same issue for subsequent assessee(s).
CBEC vide circular no. 172/7/2013-ST dated 19.09.2013 has clarified that the catering service provided to the students in the educational institution should qualify for the exemption as per the notification dated 20.06.2012. Though the said circular had considered provision of catering services under any mid-day meals scheme, but such scope is extendable to the case of the appellant inasmuch as such phrase in the circular preceded with the phrase ‘included’. The term ‘includes’ in the statutory definition is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not with restriction. In this context, the law is well settled that the term ‘includes’ widens the scope of definition, which enhances the scope of the definition as it is inclusive in nature; and therefore, the definition cannot be taken as one of restrictive approach.
Held that we are not in agreement with the impugned order that the assessee-appellant is liable to pay the adjudged demand of service tax along with interest and penalties for the services provided during the period 01.04.2012 to 30.06.2012. Therefore, the impugned order to such extent is set aside and the appeal is allowed in favour of the assessee-appellant.
FULL TEXT OF THE CESTAT MUMBAI ORDER
Feeling aggrieved with the Order-in-Appeal No. MUM-SVTAX-002- APP-107-17-18 dated 09.06.2017 (for short, referred to as ‘the impugned order’) passed by the learned Commissioner (Appeals), Service Tax-II, Mumbai, both the assessee appellant as well as the Revenue have preferred these appeals before the Tribunal.
2. Briefly stated, the facts of the case are that the assessee appellant is engaged in providing taxable service under the category of ‘outdoor catering’ service, defined under Section 65(76a) read with Section 65 (105) (zzt) of the Finance Act, 1994. During the disputed period, the appellant had entered into the agreements with Indian Institute of Technology (IIT), Kanpur for providing the mess services. The salient features in both the agreements, relevant for consideration of the present dispute are itemized herein below:
“(i) Agreement dated 06.08.2007 (for the period July 2007 to November 2009)
a. The mess premises comprising cooking and dining facilities, furniture, food/raw material containers, utensils, electricity and water shall be provided by the Institute free of cost.
b. Raw material, food articles, cooking fuel, clearing/washing, materials/tools and man power shall have to be arranged by the contractor at his cost.
c. Contractor shall ensure that sufficient man power is deployed for preparation and service of each meal including cleaning, washing and overall upkeep of mess assets and premises.
d. Persons, other than the hostel residents, may also be allowed to use the mess facility by buying coupons. The responsibility of issuing coupons shall lie with the contractor.
e. Rate for providing 3 meals per day per student was at the cost of Rs.52/-
f. The rates so fixed are inclusive of all taxes (other than UPTT and UPDT, duties and levies imposed by the State/Central Govt. and Local Bodies as on the date of award of work. However, if any new tax is imposed, enhanced by the Govt. subsequent to the award of work, the shame shall be reimbursed along with UPTT/UPDT on production of proof of payment.
(ii) Agreement dated 23.11.2009 (for the period December 2009 to March 2012)
In the amended agreement dated 23.11.2009, the raw materials and other necessary items was to be provided by the institute free of cost. The contractor was assigned with the following task:
a. Cooking and serving three meals.
b. Facilitate procurement of raw material on behalf of the hostel.
c. Coupon sales for extra items.
d. The mess premises comprising cooking and dining facilities, furniture, food/raw material containers, appliances, utensils, electricity and water shall be provided by the institute free of cost. However, cleaning washing material and manpower shall be arranged by the service provider.
e. The charges for providing operational services in the mess shall be at the cost of Rs.3,10,000 per month from December 2009 to November 2010 and later it was increased to Rs.3,75,000 per month from December 2010 to March 2012.
f. The rates so fixed are inclusive of all the taxes (other than UPTT and UPDT, duties and levies imposed by the State/Central Govt. and Local Bodies as on the date of award of work. However, if any new tax is imposed, enhanced by the Govt. subsequent to the award of work, the shame shall be reimbursed along with UPTT/UPDT on production of proof of payment.”
2.1 An inquiry was initiated by the Central Preventive Unit of Kanpur Commissionerate against the assessee-appellant, on the basis of an intelligence that they were providing taxable services without obtaining Registration certificate and were not paying appropriate service tax on such services. Based on the investigation, the department had initiated show cause proceedings against the assessee-appellant, seeking for confirmation of the service tax on provision of the taxable service i.e., outdoor catering services. The Show Cause Notices (SCNs) dated 17.10.2013 and 23.10.2012 were adjudicated by the learned Joint Commissioner of Service Tax-IV, Mumbai vide Order-in-Original dated 05.05.2016. In respect of the SCN dated 17.10.2013, the learned adjudicating authority had confirmed service tax demand of Rs.9,11,946/- along with interest and also imposed penalties under Sections 76 and 77 ibid. With regard to the SCN dated 23.10.2012, the adjudication order had confirmed service tax demand of Rs.21,84,055/- along with interest and also imposed penalties under Sections 77 and 78 ibid. The adjudication order dated 09.05.2016 was appealed against by the assessee-appellant before the learned Commissioner (Appeals), Service Tax-II, Mumbai. The appeal was disposed of by the learned Commissioner (Appeals) vide the impugned order dated 09.06.2017, in the following manner:
