No Service Tax payable On Packed Food Sold As Take Away And Not Served In Restaurant: CESTAT

The appellant/assessee has been engaged in providing catering service at restaurants for which they are holding service tax registration. On the scrutiny of records of the appellant by CERA Audit it was noticed that the appellant had a hotel cum restaurant in which they provide catering service at the 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 a parcel of food. Though the appellant has 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 was issued which stated 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 stated in the show cause notice that the activity of cooking and supplying the food as parcel to the customers as per the customer's direction is also an activity in which the food is supplied to the customers, so it is declared as service.

Counsel for the appellant submitted that the food has been sold in the packed form as take away and not served in the restaurant, therefore, it is a sale of food and no service is involved.

The CESTAT has found that the food is not served in the hotel, however, it is sold in the packed form therefore, as per the nature of the activity, it is clearly a sale of food, no service is involved.

Case Title: Hotel Utsav Versus C.C.E. & S.T. SURAT-I

Citation: Service Tax Appeal No.10130 of 2021

Counsel For Appellant: Chartered Accountant Pratika Chawla

Counsel For Respondent: Assistant Commissioner Dinesh Prithani

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