No Service Tax on Canteen maintained in a Factory: CESTAT [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted service tax exemption to canteen maintained in a factory.

The appellant, Sai Pooja Enterprises is registered with service tax Department for providing services namely “Outdoor Catering Services”. Revenue observed that there is difference of value between the Form 26AS and ST-3 return derived for the period 2015-16 and 2016-17 and accordingly documents and clarification was sought from the Appellant.

Accordingly, show cause notice was issued to the Appellant demanding service tax of Rupees Fifty- eight lakhs which was adjudicated by the Adjudicating authority by which the demand of service tax along with interest and penalties was confirmed. Being aggrieved, the appeal was filed before Commissioner (Appeals) who also upheld the order of the Adjudicating Authority. Being aggrieved by the order, the appellant is before the Tribunal.

Dhruvank Parikh, Chartered Accountant appearing for the appellant submitted that the appellant was actually involved in running and maintaining the Canteens in the Factory premises of the Companies or Service recipients on which the exemption benefit as allowed under Sr. No. 19A of Notification No. 25/2012-ST dated 20.06.2012 was available.

On plain reading of Entry 19A in the Notification dated 22.10.2013 it clearly reveals that the canteen maintained in a factory has been provided with the exemption from payment of service tax. The said Notification nowhere provided that canteen maintained by or run by the factory can only be considered for the benefits of such exemption.

Thus, irrespective of the person, who maintains the canteen in a factory, the service tax exemption as per Entry 19A is available to such person and the benefit cannot be restricted to the owner of the factory alone. Also, the words used in the above notification are canteen maintained “in a factory” not “by the factory”.

A Bench consisting of Ramesh Nair, Judicial Member and Raju, Technical Member observed that “In the present case as evident from documents submitted by the appellant, since the appellant had provided the services of serving foods and maintaining the canteen located in the factories, the benefit of service tax exemption as per the above referred Notification should be available to it.”

To Read the full text of the Order CLICK HERE

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