pri Service tax on free Pick-up/Home delivery of food, being ‘Sale’ in nature? Service tax on free Pick-up/Home delivery of food, being ‘Sale’ in nature?
CA Bimal Jain

No Service tax on free Pick-up/Home delivery of food, being ‘Sale’ in nature – Chandigarh Commissionerate


The Government vide Entry No. 19 of the Mega Exemption Notification No. 25/2012-ST dated June 20, 2012 (Mega Exemption Notification) granted exemption from payment of Service tax to Restaurants, eating joint or a mess providing service in relation to food or beverages, other than those having:

(i) Facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year, and

(ii) License to serve alcoholic beverages.

Thus all AC Restaurants having license to serve liquor were exigible to Service tax.

Subsequently w.e.f April 1, 2013, Entry No. 19 of the Mega Exemption Notification was amended by Notification No. 3/2013-ST dated March 1, 2013 which deleted the point (ii) thereof. Accordingly, after such amendment, Service tax is levied even on the Restaurants which do not have a license to serve alcoholic beverages. This was a major change for the Industry as thousands of Restaurants and eating joints including small and medium came within the ambit of Service tax by such amendment.

However, questions were raised whether Take-away or Home delivery of food from Restaurants, such as McDonald’s, Domino’s, Pizza Hut etc., would also attract Service tax, as most of these have air-conditioned dining space and some of these outlets have dedicated counters outside air-conditioned halls for Take-away orders. A view was entertained that Take-away or Home-delivery Orders should not be taxed since no services, amenities etc. of the Restaurants were being offered to the customers in case of Take-away or Home delivery of food. But, in the absence of any clarification, the Restaurants continue to levy Service tax on the same.

Clarification by Chandigarh Commissionerate:

The Service Tax Department of Chandigarh vide its letter C.No. ST-20/STD/Misc./Sevottam/62/12/4693 dated August 13, 2015 (“the Clarification”) has clarified that free Home delivery/ Pick-up of food is not liable to Service tax.

The Department explained the matter further by stating that the dominant intention of such transaction is that of ‘Sale’ as food is not served at Restaurant and no other element of service such as ambience, live entertainment (if any), air conditioning or personalised hospitality is offered. It is further stated that Service tax can be levied if there’s an element of ‘Service’ involved which would typically be the case where food is served in Restaurant.

However, the Department has further clarified that the above transaction is not liable to Service tax, being sale in nature, only if no amount is charged for such free delivery of food.

Our Comments:

Similar Clarification on the stated matter is much needed from the Central Board of Excise and Customs (“CBEC”), so that it could be made applicable uniformly throughout, irrespective of the jurisdiction of particular Department.

Copy of Official Text is as follows :-

serVICE TAXPlease Note- on 9.9.2015, the Learned Deputy Commissioner concerned issued a letter to the Restaurant stating that his previous letter may be treated as withdrawn ab initio.

(Bimal Jain, FCA, FCS, LLB, B.Com (Hons),  Email:

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  1. RK Gupta says:

    Domino’s and McDonalds in Surat continue to charge Service Tax @6% of food bill for pick-up / take-out orders even today. When contacted, they say that this is as per rules and regulations. Can Consumer Forum ensure suitable actions against these chain restaurants.


    I just want to know in the above context that how to show such sale in the service tax return. I am dealing with a restaurant which is providing restaurant service as well as food delivery. In service tax return how to show such sale. As we know that there is separate head in the service tax return form

  3. Saurabh Ahuja says:

    Hello sir!! Thanks for writing this article.
    I would like to ask that if a restaurant is charging extra service tax (more than 6%) in that case what are authorities we should approch for getting remedy??
    My second question is that what is the jurisdiction of deputy commissioner of cbec of chandigarh ?? Does it extends to mohali?
    Thanks for your assistance.

  4. Dilipbhai Gandhi says:

    What about takeaways/carry out from restaurants ? In such case of parcel food we carried out form restaurants, can service tax be applicable ?

  5. Sufiyan Khan says:

    The letter issued by the office of the Deputy Commissioner of Central Excise and Service Tax Division (Chandigarh) dated 13/08/2015 on clarification of charging service tax on home delivery has been withdrawn vide ST-20/STD/Misc./Sevottam/62/12/6118 dated 09/09/2015. We are back to square one. No clarity on the subject.

  6. Rohit says:

    When we buy goods and goods are delivered to our place then service tax is applicable on freight not on total amount of goods. Therefore, in case of home delivery , if delivery charges is taken then service tax should be applicable on delivery charges not food which is treated as goods…

  7. MADHU says:

    Is this applicable right now or will be applicable from certain date in future.? And I believe that this will be applicable to Whole India except J&K as per the Act. Is it so?

  8. kavita says:

    Vinod.. though the bill would be silent but at the same time, customer should be awake that service tax is charged on such transaction or not as it is ultimately bared by them. Additionally, during service tax audit, department should make sure that restaurants are using separate codes for customers eating food there and for customers asking for take away…

  9. kavita says:

    sir, i believe that for free home delivery, though none of the facilities like ambiance or AC is used but at the same time, home delivery service is there…

    so as per my view, it is ok not to charge service tax on take away but in case of home delivery, service tax should be charged…


    Good clarification issued by department. If such clarification can be issued by CBEC then it can be easily implemented all over India else the vendors in order to be in safe side collect and pay service tax in absence of any clear notification.

  11. Ashish says:

    the key word here is FREE…… no service tax is to be charged on free services….. so free home delivery and pickup falls under these categories

  12. Anshul says:


    This has already been clarified once by the TRU in their letter D.O.F.No.334/3/2011-TRU (para 1 Annexure A) but the same is not practiced in India.

    Like you said CBEC should notify this rather than clarifications

  13. abhishek says:


    but home delivery is given only when the customer places an order of a minimum amount of Rs.300 or more. is this not a conditional delivery? Service is involved when the food is delivered at home. so why no service tax?

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