In a recent ruling, the Allahabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held that the sale of food items by takeaway is not liable to service tax.
In this case, the assessee, M/s Indian Bites, had not paid service tax on the foods sold on the counter/taken away. The adjudicating authority held that there is no ground to levy a service tax on takeaway as the sale of food over the counter is not service.
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Although the department appealed before the Commissioner ( Appeals ), the latter held that service tax is not liable for take-away or home deliveries as service tax is payable only on the service portion of the transaction.
As the Commissioner ( Appeals ) dismissed the appeal filed by the revenue, the latter appealed before the CESTAT.
The issue involved in this case is whether the activity of take away classifies as a taxable service under the category of restaurant service and is liable to service tax.
The bench referred the case of Haldiram Marketing Pvt. Ltd. Vs. Commissioner of CGST, GST, Delhi East Commissionerate [2023 (71) GSTL 414 (Tri.-Del.)] in which the tribunal held that the process involving pick-up or home delivery is not liable to service tax as the above-mentioned activity only amounts to sale.
The bench also relied on the judgement of the Madras High Court in the case of Anjappar Chettinad A/C Restaurant vs. Joint Commissioner [2021 (6) TMI 226 in which the high court held that take away, which is the sale of packaged food, constitutes pure trading activity and there is no component of service involved.
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The CESTAT, comprised of P. K. Choudhary ( Judicial Member ) and Sanjiv Srivastava ( Technical Member ) dismissed the appeal filed by the revenue and held that the takeaway services provided by the respondent were not liable to service tax.
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