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Service Tax on Outdoor Catering

devendra saraf (chartered accountant) (31 Points)

26 June 2008

Whether VAT or Service Tax is payable on food bill submitted by a caterer providing catering services in a company owned guest house?

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(Guest)

The text of notification No. 12/2003 -Service Tax, dated 12th June, 2003 is given on page 22. As you will see this notification says that no service tax will be charged on the value of goods and materials sold by the service provider to the recipient of a taxable service subject to the condition that there is documentary proof specifically indicating the value of such goods and materials. This means that there should be a separate bill raised to the customer indicating the value of such goods. To clarify the position further I am reproducing copy of a letter by Tax authority on the subject, hereunder;

GOVERNMENT OF INDIA
MINISTRY OF FINANCE/DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE & CUSTOMS
NORTH BLOCK, NEW DELHI - 1 10 001
F.No. - 176/1/200 1-CX.4 (Pt.)
New Delhi, the 31st March, 2004

S.K.BHARDWAJ
Member
Tel : 91-11-23094738
Fax: 91-11-23093020

To
The Secretary-General,
Federation of Hotel & Restaurant Association of India,
B-82, 8th Floor, Himalaya House, New Delhi-110 001

Sir,

Sub: Service Tax on Convention Services for Hotels - Reg.

Please refer to letter No.MOF/ST/1/2004 dated 11th March, 2004 on the above subject addressed to Revenue Secretary. You had requested that an abatement of 40% may be granted on the gross value of convention services provided by hotels towards the food and beverages supplied, as in case of services provided by a 'mandap-keeper'. This issue is being examined and would be considered at an appropriate time.

I may, however, inform that in case goods or materials are sold by a service provider to a service receiver during course of providing service, general exemption from service tax (vide exemption No.l2/2003-Service Tax, dated 20-06-2003) is presently available to the extent of the value of such goods, subject to availability of a documentary proof indicating the value of such goods. In other words, if the hotels raise separate bills towards the supply of food or beverages made during a convention, no service tax is chargeable to the extent of the value of these items.

Yours faithfully,

(S.K. Bhardwaj)

Hope this matter rests!