CHENNAI: The Madras High Court ordered that service tax is not applicable on food served as ‘take away’ or ‘parcels’. The court passed the order on the plea moved by Anjappar Chettinad Hotels, Thalapakkatti Hotels, RSM Foods and Prasanam Foods against the notices of the Joint Commissioner of GST and Central Excise.
The hotels contended before the court that there is no liability for the sale of food at the take away counter or by parcel. They stated that the sale of packaged food constitutes pure trading activity and there is no component of service involved and comes outside the ambit of service tax.
The court relied on several judgments on similar issues that involved both the components of sale and service. The single-member bench of Justice Anita Sumanth in its order said, “.. in the case of take away or food parcels, the aforesaid attributes are conspicuous by their absence.
In most restaurants, there is a separate counter for the collection of take-away food parcels. Orders are received either over telephone, by e-mail, online booking or through a food delivery service such as Swiggy or Zomato. The parcels are brought to a separate counter and are picked up.” Thus, the court held that food and drink taken away in parcels by restaurants do not attract service tax under the Act.