Free Home Delivery of Food - No Service Tax - Deputy Commissioner Withdraws Clarification
AS we reported in DDT 2672 - 27 08 2015, 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.
DDT asked, "Does the CBEC agree with this?"
The National Restaurant Association of India (NRAI) asked the same question to the Revenue Secretary [Please see ]. Neither the Revenue Secretary, nor the CBEC clarified but on 9.9.2015, the Learned Deputy Commissioner concerned issued a letter to the Restaurant stating that his previous letter may be treated as withdrawn ab initio. And this withdrawal letter is also issued with the prior approval of the Additional Commissioner.
Why should a Deputy Commissioner sitting in Chandigarh give such a controversial clarification and then hastily withdraw it? Just to create confusion?
Clarity in tax matters?