A Co. ABCD Ltd. develop a mall and in mall's some part was occupied by Food court containing 100 seats and 12 Food Counter.
ABCD Ltd. made agreement with 12 organisation for running one food counter each in Food Court particular space was occupied by each shop and prepare particulars kind of foods and sold to customer and give computer software support.
Food Selling procedure is like below
1. Customer enter into shop and purchase Debit card of certain amount (i.e. Rs. 100, 200, 500 etc.) which is paid to cashier arranged by ABCD Ltd.
2. Customer goes to desired counter and purchased food from counter and swap card in machine situated in counter and in the end money remained in Debit card refunded to Customer by cashier of ABCD Ltd.
Now in this food court of The ABCD Ltd. they provide a centralised air conditioning facility also which is by default in every part of the mall but not inside the food counters at all of the food court,no where in the food counters the AC Ducts are installed,
so the food are sold by the food counters after swapping the Pre-filled debit cards & is enjoyed by them in the food courts common area space provided by the mall only,
for this AC facility ,the food counter's are not at all charged by the mall authority & the AC service is wholly provided to customer's by default from the Mall Authorities part only,please note that No separate billing of CAM(common area maintenance) charge is being billed by the mall authority
So my question is that are not the food counter organisation exempted from the Service tax as their "Establishment" doesn't have the facility of Air-conditioning or centralized air heating,nor they are selling alcohol at all as the exemption notification under service tax Notification No. 25/2012-Service Tax
the Central Government, being satisfied that it is necessary in the public interest
so to do, hereby exempts the following taxable services from the whole of the service tax leviable
thereon under section 66B of the said Act, namely:- reads as follows
The amended Item No.19 reads as under, with effect from April 1, 2013:
"Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year".
so one more thing as the definition of the word establishment is even missing in the notification one can have a full enjoyment of the cache lying into this but still i believe that if we relate this definition to the Shop & Establishment Act we can draw the definition of Establishment from there i.e..................
Secondly …….in the Mega Exemption Notification, the word 'establishment' has been used. Of course, this word has not been defined. The most appropriate definition of 'establishment' that would be relevant to restaurants, etc. would be the one contained in the Shops and Establishments Acts of the States.
Section 2(9) of the Delhi Shops Act, 1954 is reproduced below…..
"establishment" means a shop, a commercial establishment, residential hotel, restaurant, eating-house, theater or other places of public amusement or entertainment to which this Act applies and includes such other establishment as Government may, by notification in the Official Gazette, declare to be an establishment for the purpose of this Act;".
It is, therefore, apparent that the definition contained in the Shops and Establishments Act would be most relevant to interpret the word 'establishment' in the Mega Exemption Notification.
And which means to say that the word 'establishment' appearing in Item No. 19 of the said Notification should be read to mean the 'establishment' of the restaurant, eating joint, mess, etc. There is no logic to interpret the word 'establishment' independent of the words 'restaurant, eating joint or a mess'.
Accordingly, for a restaurant, eating joint or mess to be taxable, the air-conditioning has to be directly linked to the restaurant. The very rationale of levying service tax on 'services' rendered by restaurants with effect from 1-5-2011 can be traced to Para 1.3 of the Board Circular D.O.F. No. 3334/3/2011-TRU dated 28-2-2011, which read as follows:
"The new levy is directed provided by high-end restaurants that are air-conditioned and have license to serve liquor. Such restaurants provide conditions and ambience in a manner that service provided may assume predominance over the food in many situations . It should not be confused with mere sale of goods at any eating house, where such services are materially absent or so minimal that it will be difficult to establish that any service in any meaningful way is being provided".
Although one may opine that this Circular has lost its significance w.e.f 01/04/2013, the fact of the matter is that if one omits the words "license to serve liquor" the rationale given in the Circular may continue to hold good. Inasmuch as unless the air-conditioning is directly linked to the restaurant viz. providing condition and ambiance in a manner that service provided may assume predominance over the food, it cannot be said that a service has been provided.
As such, there is no reason to warrant a view that the term 'establishment' should be taken to mean the whole of the premises in which the restaurant is housed or its part and that, even if the air-conditioning is available in a part of the premises that is not linked or related to the restaurant, the restaurant would still be liable to service tax.
so my simple question is that are these Food counter Organisation liable to collect Service tax from the customer's or not????
please answer & help......& please do clarify me if i am wrong
CAclubindia
