Catering services provided to members in club premises was an outdoor catering service: CESTAT

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Facts of the case: M/s Gourmets Food (“respondent”) is engaged in providing catering services. Under one such instance, it entered into an agreement with M/s. Anand Niketan Club (“Club”) to operate a catering service in the premises offered by Club.

The revenue initiated proceeding against the respondent to demand and recover service tax for such activities under the category of ‘outdoor caterer service’. The Adjudicating Authority held that, this arrangement between the respondent and the club was a revenue sharing agreement and hence not liable to services tax and consequently dropped the demand.

Observations: After going through the agreement the Hon’ble CESTAT observations are as under:

  • Various clauses of the agreement make it clear that it is a service agreement for a consideration entered into between the two parties.
  • The payment of consideration for the respondent to render “catering service” at the premises of the club by itself will not make the arrangement as a Joint Venture.
  • There is no shared responsibility or obligation, legally enforceable against the club except the provisions of terms and conditions inbuilt in the contract. The respondent is appointed as a caterer and are paying considerations for the premises allotted to them.

Held: The Hon’ble CESTAT held that, it is not just a revenue sharing agreement but an outdoor catering service being provided by respondent  to club and accordingly it set aside the portion of the impugned order dropping the demand under “outdoor caterer service” against the respondent.

Citation: [2018] 98 taxmann.com 121 (New Delhi – CESTAT)

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