Free Home Delivery of Food - No Service Tax - Deputy Commissioner Clarifies
COMMENTING in our columns on 24.05.2013 in Service tax on AC Restaurants - A peep into Legal Interpretation, Advocate Sivakumar wrote,
Most of these restaurants are also charging service tax on self-service, take-away/parcel as also on home delivery, which seems highly unjustified. Truly speaking, these are transactions of sale, with a negligible service component.
The CBEC should come out with a Circular and remove the cooking fumes from the restaurant kitchen rather than keeping mum and allowing others in the 'establishment' to have their fill!
Now, the Deputy Commissioner of Central Excise and Service Tax Division, Chandigarh has clarified to a restaurant:
Please refer to your office letter dated 22-7-2015 (received in this office on 23-7-2015) on the above cited subject where under Clarification as to whether Service Tax is payable on food sold by way of Pick-up or Home deliveries has been sought.
It is clarified that in case of the transaction involving Pick-up or the Home Deliveries of the food sold by the Restaurant, the dominant nature of the transaction is that of sale and not service as the food is not served at the Restaurant and further no other element of service which is offered at the Restaurants, be it ambience, live entertainment, if any, air conditioning, or personalized hospitality is offered. The Service Tax can be levied if there's an element of 'Service' involved which would typically the case where food is served in restaurant.
The above transaction is not liable to Service Tax, being sale in nature, only if, no amount is charged for such free delivery of food.
This is issued with prior approval of the Additional Commissioner.
Does the CBEC agree with this?