The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi Bench has held that assessee entitled to Service Tax Refund as element of service involved in sale of food to passengers subject to passing unjust enrichment test.
The respondent, M/s Foodworld is engaged in the business of sale of packed food and beverages on board the trains run by Indian Railways besides sale of packed food items/beverages at stalls at railway stations. The hawkers of the respondent carry food with them for sale and if any passenger desires, the same is sold at the specified price. The respondent is not appointed by the passengers and there is no obligation on the passengers to buy food. The respondent is registered with the service tax department under the provisions of Finance Act, 1994 read with the rules. Under the erroneous advice, the respondent deposited the service tax under the head “outdoor catering service”.
The coram of Judicial Member, Anil Choudhary and Technical Member, P.V. Subba Rao noted that the law has been clarified and declared by Delhi High Court in the case of IRCTC and accordingly, the respondent assessee is rightly entitled the refund of the service tax paid under erroneous advice, subject to passing the test of unjust enrichment.
“We find that in the facts and circumstances in the transaction of sale, as in the facts of the present case, no machinery provision was also there for bifurcation of the transaction into service portion and sale portion, for levy of service tax. We find Rule 2C was introduced in the Service Tax Determination of Valuation Rules, 2006 with effect from 1 July, 2012 vide Notification No. 24/2012-ST, which has provided for mode of bifurcation by allowing abatement for the sale portion in the case of service of food in a restaurant or in the course of outdoor catering,” the CESTAT said.
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