The Hon’ble Madras High Court (HC) in Anjappar Chettinad A/C Restaurants v. Joint Commissioner [W.P. Nos. 13469 of 2020, 28789 & 28095 of 2019 and 1748 & 5935 of 2021 decided on May 20, 2021] held that provision of food and drink to be taken-away in parcels by restaurant tantamount to the sale of food and drink and thus, shall not attract service tax under the Finance Act.
The Anjappar Chettinad (“the Petitioner”) run Air-Conditioned restaurants under the name and style of Anjappar Chettinad, Thalapakkatti Hotels, RSM Foods and Prasanam Foods, the latter two being franchisees of Sangeetha restaurant, respectively. The Petitioner holds service tax registration for providing restaurant services, outdoor catering services and mandap keeping services. Audit was undertaken in all the cases and the Department concluded that service tax had not been discharged in relation to ‘take away/parcel services’ for various periods upto June, 2017 when Goods Services Tax (“GST”) came into force.
Whether there is a liability to pay service tax under the Finance Act, 1994 (“Finance Act”), on food that is ‘taken away’ or collected from restaurants or eateries, in parcels.
The Hon’ble Madras HC in W.P. Nos. 13469 of 2020, 28789 & 28095 of 2019 and 1748 & 5935 of 2021 decided on May 20, 2021, held as under:
Section 66E(i) of the Finance Act
“66E. Declared services
The following shall constitute declared services, namely-
(i) Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity.”
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