No Services tax on serving of food in canteen by Factory

CBEC exempts Services provided in relation to serving of food in canteen maintained by a Factory. Food or Beverages Services provided by a Canteen exempt from Service Tax

The Central Government vides Notification No. 14/2013-ST dated October 22, 2013 (“the Notification”) has amended the Notification No. 25/2012-ST dated June 20, 2012 (“the Mega Exemption Notification”).

The Notification adds Entry No. 19A in the Mega Exemption Notification which provides as under:

“Services provided in relation to serving of food or beverages by a canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year”

In accordance with the above, services provided in relation to serving of food or beverages by a canteen having the facility of air-conditioning or central air-heating at any time during the year maintained in a factory covered under the Factories Act, 1948 will be exempt from levy of service tax.

Open Issues:

This is a welcome amendment made by the CBEC in the light of all air-conditioned restaurants including eating joints or mess etc., coming under the service tax net irrespective of the fact whether they serve alcoholic beverages or not vide Notification No. 03/2013-ST dated March 1, 2013 (“Notification 03/2013”) amending Serial No. 19 of the Mega Exemption Notification, with effect from April 1, 2013.

Further, the above addition vide Entry No. 19A will be applicable with effect from 22^nd October, 2013 (Effective date of the Notification No. 14/2013-ST). Hence, the question will arise -> whether the said exemption is not available for the period starting from 1^st April, 2013 to 21^st October, 2013.

Furthermore, the Entry No. 19A states this exemption is available for Service provided in relation to serving of food in canteen maintained by Factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year. What about canteen maintained by the Service Provider?

We request to the Board to look into the matter and clarify this issue.

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Related Notification is as follows :-

Notification No. 14/2013-Service Tax, Dated - 22^nd October, 2013

G.S.R.____ (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994, (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.25/2012-Service Tax, dated the 20^th June, 2012, namely:-
In the said notification, in the opening paragraph, after entry 19, the following entry shall be inserted, namely:-

“19A. Services provided in relation to serving of food or beverages by a canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year.”.

[F. No. B1/13/2013-TRU]

(Akshay Joshi)
Under Secretary to the Government of India
Note.- The principal notification was published in the Gazette of India, vide notification No.25/2012-Service Tax, dated the 20^th June, 2012, vide G.S.R.467(E), dated the 20^th June, 2012 and was last amended by notification No.13/2013-Service Tax, dated the 10^th September, 2013 vide G.S.R.616(E), dated the 10^th September, 2013.

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Bimal Jain
FCA, FCS, LLB, B.Com (Hons)
Mobile: +91 9810604563
E-mail: bimaljain@hotmail.com