Hotel UTSAV Vs C.C.E. & S.T. SURAT-I (CESTAT Ahmedabad)
We find that the appellant have been discharging the service tax in respect of food served in the restaurant to their customers. However, they are not paying service tax in respect of packed food which is sold as take away either on the counter of the restaurant or through delivery boys to the customer’s place. In this undisputed fact, the food is not served in the hotel whereas the same is sold in the packed form therefore, as per the nature of this activity, it is clearly a sale of food, no service is involved.
Issue has been settled by the Hon’ble High Court of Madras in the case of Anjappar Chettinad A/C Restaurant reported at 2021 (51) GSTL 125 (MADRAS) which held as follows:-
“ 27. In the case of take-away or food parcels, the aforesaid attributes are conspicuous by their absence. In most restaurants, there is a separate counter for collection of the take-away food parcels. Orders are received either over telephone, by e-mail, online booking or through a food delivery service such as swiggy or zomato. Once processed and readied for delivery, the parcels are brought to a separate counter and are picked up either by the customer or a delivery service. More often than not, the take-away counters are positioned away from the main dining area that may or may not be air-conditioned. In any event, the consumption of the food and drink is not in the premises of the restaurant. In the aforesaid circumstances, I am of the categoric view that the provision of food and drink to be taken-away in parcels by restaurants tantamount to the sale of food and drink and does not attract service tax under the Act.”
From the above judgement, it is observed that the fact of the above case is absolutely identical to the facts of the present case inasmuch as the food in packed form is sold either on the counter or through delivery boys to the customers’ place. Therefore, the activity is clearly of sale of food and no service is involved.
FULL TEXT OF THE CESTAT DELHI ORDER
The brief facts of the case are that the appellant M/s Hotel Utsav are engaged in providing service as catering service at restaurant for which they are holding service tax registration. On the scrutiny of records of the appellant by CERA Audit for the period from 2013-14 to 2017-18 (upto June 2017) it was noticed that the appellant having a hotel cum restaurant in which they provide catering service at restaurant. At the orders of the customers, they also supply the cooked food after packing the same to the customers for which they invoice as parcel of food. Though the appellant have been paying service on food supply in the restaurant but they were not paying service tax on food cooked and supplied in package to the customers as per their direction. A show cause notice dated 09.09.2019 was issued wherein it was contended that as per clause (i) of Section 66E of the Finance Act, 1994, service portion in any activity wherein goods, being food or any other articles of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of activity is a declared service. It was further contended that as per Rule 2C of Service Tax (Determination of Value) Rules 2006, the value of service portion in any 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 activity at restaurant or as outdoor catering shall be specified percentage of the total amount charged for such supply in terms of the following table.
