The Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has ruled in favor of Bikanervala Foods Pvt. Ltd., freeing the company from service tax on sales via “Take-Away” and “Home Delivery.”
The Assessee, Bikanervala Foods Pvt. Ltd., a well-known chain of Indian sweets and snacks, was audited by the service tax authorities, who observed that the company claimed exemptions on sales via “Take-Away” and “Home Delivery” services. The department raised a show-cause notice on January 5, 2017, demanding service tax amounting to INR 5,18,75,282, including interest and penalties. The demand was initially confirmed by the adjudicating authority and subsequently upheld by the Commissioner (Appeals).
During the course of audit, the audit team observed that the appellant was providing Restaurant Service from the Restaurant having air conditioning facilities and had taken exemption on sale of food by way of “Take Away” or “Home Delivery” during the Financial year 2013-14 and 2014-15 amounting to INR 12,96,88,205 (INR 5,50,62,291/- during the year 2013-14 and INR 7,46,25,914 during the year 2014-15), and for which taxable value after abatement of 60% works out to be INR 5,18,75,282.
Sukhpal Singh and Vishal Jain, Chartered Accountants appeared for the appellant and S.K. Meena, Authorised Representative represented the respondent/Revenue.
The bench noted that the issue that arises in the present case is whether the activity of “Take Away” and “Home Delivery” tantamounts to taxable service under the category of Restaurant Service. We find that the issue is no longer res integra and has been decided by this Tribunal in the case of Haldiram Marketing Pvt. Ltd. Vs. Commissioner of CGST, GST, Delhi East Commissionerate 2, where the facts and circumstances are identical and hence, the present case is squarely covered by the observations made therein.
The bench noted that, “the transaction involving “Pick-up” or “Home Delivery” of the food items sold by the restaurants are not liable to service tax, being in the nature of sale only and no amount is charged for free delivery of food as the dominant nature of the transaction is that of sale and not service, as the food items are not served at the restaurant and there is no other element of service, which is normally offered at the restaurant”, from the decision from Haldiram Marketing Pvt Ltd.
It was also noted that, In view of the aforesaid observations, the Tribunal concluded that no service tax can be levied on the activity of “Take Away of food items” as it amounts to sale and does not involve any element of service”.
The CESTAT bench of Binu Tamta, Member (Judicial) and Hemambika R.Priya, Member (Technical) thus held that, “Since the facts of the present case are absolutely identical and give rise to the issue of taxability of sale of food items through “Take Away” or “Home Delivery”, the activity is clearly of sale of food and does not involve any service element and, therefore, following the ratio of the judgements referred above, the activity of sale of food items by “Take Away” or “Home Delivery” by the appellant is not liable to service tax.”
Accordingly, the impugned order was set aside and the appeal was allowed.
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