Perils of Self-assessment - No Refund?

In respect of service provided by restaurant, the statutory provision of Section 66E(i) - Declared services, authorizing levy of service tax is as under:
“(i) service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity.”
There is no provision regarding dominant nature of the transaction, i.e. whether it is sale or service, but the word “supplied” is used.

However, the activity of ‘trading of goods’ is covered under Negative List of services at Section 66D(e). If a restaurant purchases any food item or beverage and sold it as such, either across the counter or as home delivery, such activity may treated as trading of goods. The activity of cooking/preparing food or beverages by using various ingredients and selling thereafter, either by pick-up or home delivery, is not covered under trading. However, such activity can be treated as manufacturing or production activity, as new marketable products emerge, which are different from the ingredient used and such products are covered under central excise tariff. Any process amounting to manufacture or production of goods are also covered under Negative List of services at Section 66D(f).

In view of the above, it appears that the activity of cooking/preparing food or beverages by using various ingredients and selling them thereafter, either across the counter (pick-up) or at customer’s door step (home delivery), can be considered as activity of manufacture/ production and sale, which is subject to Central Excise and VAT laws, and Service Tax is not leviable thereon.

These are personal views.

Shvetal Parikh 11/09/2015