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2004 DIGILAW 138 (UTT)

Yogita Kapoor v. Union of India

2004-08-06

IRSHAD HUSSAIN, V.S.SIRPURKAR

body2004
Judgment 1. Rule returnable forthwith. 2. Parties waived notice. Heard finally with the consent of the parties. 3. The controversy in this petition is of a very narrow conspectus. The petitioner Mrs. Yogita Kapoor has entered into a contract with M/s Titan Industries Ltd. - respondent no. 3 herein. This contract was entered on 07-07-1997. Under the same, she was to prepare food as per the orders of the company and reach the said food to the employees of the Company. There were a number of employees, who required the food as they were either bachelors or not keeping their families with them and, therefore, the Company had made this arrangement of feeding them and for that purpose, the Company engaged the services of the petitioner. Annexure 1 to this writ petition is a contract for cooking. The Company had called the quotations and the petitioner responded to that invitation and was ultimately bestowed with the contract. The period of the contract was w.e.f. 01-04-1997 to 31-03-1998. The petitioner was to get Rs. 5/- per lunch towards the preparation charges and material i.e. vegetable and grocery, to be supplied by the company. Clause I and II of the contract are relevant clauses in this contract. They are as under: "You shall prepare food to the order of the company at the time intimated to you. The quantity of the food will also be intimated to you the previous day. For this purpose the company shall supply you the ingredients. You shall arrange to cook the food in your premises and transport the same to the factory premises at 12 noon every day (except Sunday and other holidays as intimated to you from time to time) in the hot cases provided by the Company. These hot cases will be taken back by you as soon as the food is transferred to the containers available in the factory." 4. The other clauses are not really necessary for our purposes. Accordingly, the petitioner started the work and she was served with notice on 17-08-1997 by the Assistant Commissioner Central Excise to get herself registered under the Service Tax Act. This was replied to by the petitioner, wherein she informed that she was not a 'caterer' and therefore, there was no, registration required. On 13.04.1999, Superintendent, Central Excise, Range Dehradun, again issued notice to the petitioner for imposing Service Tax. This was replied to by the petitioner, wherein she informed that she was not a 'caterer' and therefore, there was no, registration required. On 13.04.1999, Superintendent, Central Excise, Range Dehradun, again issued notice to the petitioner for imposing Service Tax. This notice was tried to be met by the Titan Industries by letter dated 19-04-1999, in which Titan Industries clarified the work and job undertaken by the petitioner as a 'cook' on labour charge basis. The petitioner also sent letter dated 07-05-1999, wherein she again claimed that she was a 'cook' and was not supplying any food and she could be not said to be 'out door caterer'. She even sent a detailed reply before the Deputy Commissioner, Central Excise, Dehradun. However, it ultimately seems that by order dated 18-02-2000 pertaining to the Assessment Year 1997-98, the order of assessment came to be passed against the petitioner directing her to pay service tax amounting to Rs. 8364/- @ 1.5% per month till the deposit of the said amount. Similarly amount of penalty was also imposed against the petitioner u/s 76 of the Service Tax Act. Amount of penalty of Rs. 40,900/- u/s 77 of the Service Tax Act was also imposed against her. 5. It is this order which came to be challenged by the writ petition before the Allahabad High Court vide writ petition no. 362 of 2000. The writ petition thereafter was transferred to this Court and that is how the matter has come before us. It seems that the learned Judges of the Allahabad High Court have already granted stay of the operation of the impugned order. " 6. Notices were sent and Mr. V.B.S. Negi, learned Senior Standing Counsel, Centrai Government appears on behalf of respondents nos. 1 and 2: 7. Learned Mr. V.K. Kohli, Senior Advocate firstly invites our attention to the impugned order and points out that the basis of the assessment against the petitioner is on the pre-supposition that the petitioner is a 'caterer' within the meaning of definition under section 65 (8) of the Finance Act, 1997. The learned Senior Advocate has taken us through the impugned assessment order as also the correspondence, which took place between the authorities on the basis of the notices issued to the petitioner. The learned Senior Advocate has taken us through the impugned assessment order as also the correspondence, which took place between the authorities on the basis of the notices issued to the petitioner. Our attention was invited to the finding given by the Assessing Authority and it was pointed out that the dispute is that the petitioner was rendering the 'outdoor catering services' in terms of Finance Act, 1997. The learned Senior Counsel has further pointed out that the petitioner had set up a defence that she was not a 'caterer' within the meaning of Finance Act, 1997 and that the concerned Authority has done complete violence to the language of the definition in holding her to be a 'caterer'. The learned counsel submits that all that the petitioner was doing was cooking for the Company not on the salary but on the contractual rate of Rs. 5/- per lunch per person .. He has pointed out further that there would be no question of holding the petitioner liable to pay the Service Tax because she was not a 'caterer' under the definition. 8. The definition of the caterer is an under the Finance Act, 1997 : 65(8) : "caterer" means any person who supplies, either directly or indirectly, any food, edible preparations, alcoholic or non-alcoholic beverages or crockery and similar articles or accoutrements for any purposes or occasion." 9. Relying on this definition, learned Senior Advocate says that the petitioner in reality does not supply any food or edible preparation as contemplated in the language of the Act. All that she has to do was to cook the food on the basis of the supplies made to her by the Company i.e. M/s Titan Industries Ltd. respondent no. 3. The learned counsel further points out that it is evident from the contract that the petitioner does not have to arrange for the 'vegetables or grocery' for preparing food, nor does she spend for it. The supply of the ingredients was to be made by the company. To buttress the argument, the learned counsel further argues that in fact the third respondent has been assessed for the sale of these vegetables and grocery which they had supplied to the petitioner for cooking and which eventually find their way to the employees of the Company. The supply of the ingredients was to be made by the company. To buttress the argument, the learned counsel further argues that in fact the third respondent has been assessed for the sale of these vegetables and grocery which they had supplied to the petitioner for cooking and which eventually find their way to the employees of the Company. This proposition that the third respondent has paid the Sales Tax is not disputed before us, not could be disputed. Therefore, the question is as to whether the petitioner who merely cooks for the Company at a particular rate becomes a 'caterer' within the definition of the term. In short, the contention of the learned counsel is that if the petitioner cannot ever be covered under the definition of 'caterer', then there will be no question of liability of Service Tax against her. 10. Against this contention, learned counsel for the Central Government relied upon on the wordings of the contract and interestingly relies on the words "supply and transport". The learned counsel for the respondents says that admittedly the petitioner used to cook the food and then used to transport the said goods in the hot cases to the factory premises and that activity would take into its fold the 'supply'. It is, therefore, the contention of the learned counsel for the Central Government that since the petitioner 'supplies' the cooked food to the factory employees, she would be covered in the definition of a 'caterer' directly or indirectly. 11. We fail to see any logic in this argument. As a matter of fact the word 'supplies directly or indirectly' in the definition would obviously mean the supply made by the caterer. The cost of said food must have been borne by the caterer of the service provided by the caterer must include the cost of the food supplied or arranged by the caterer. The contract of catering is that the 'caterer' makes the available the food and then supplies to the person who engages the services. The mere preparation of the food, the cost of which is not borne by the cook but by some other person will certainly not include and cannot be described as supply, direct or indirect, of the food. In our opinion, the definition is very clear to exclude the mere cooking service rendered by the petitioner. We may take an example. The mere preparation of the food, the cost of which is not borne by the cook but by some other person will certainly not include and cannot be described as supply, direct or indirect, of the food. In our opinion, the definition is very clear to exclude the mere cooking service rendered by the petitioner. We may take an example. A Caterer may arrange for the grains and vegetables, take services of the cook, makes food available and then supplies to the customers, then the said customer who has footed the bills has obviously paid for catering service, which would include the price of supplies, the labour charges of servant (including the cook) as also his profit. However, a 'cook' engaged by such caterer can never be a 'caterer'. He or she merely gets paid for the service of cooking rendered to the 'caterer'. Thus, the petitioner who is merely engaged to cook cannot be included into the definition of a 'caterer'. 12. In this case we are considering the tax liability of Mrs. Yogita Kapoor, who is only giving her services as a cook to the Company. She prepares the food and that food has to be transported to the employees of the company in hot cases provided by the company. For that she cooks the food from the material supplied by the Company, for which she does not bear the cost. There was no question of her earning any profit for the food and vegetables, which she cooked. She was a mere cook, however, her wages were to be calculated as per the contract. We, have no doubt, under these circumstances, that the petitioner cannot be covered in the definition of a 'caterer'. It is not the case of the department that besides the wages she gets, she earns any profit on the basis of any supply of food or vegetables. It will be apparent from the order that the petitioner does not supply the articles or any crockery or anything else in furtherance of the contract. Even hot cases, which the petitioner has used, were supplied by the Company under the terms of the contract. The petitioner merely cooked the food and then supplied for the employees of the company under the hot cases provided by it. 13. Even hot cases, which the petitioner has used, were supplied by the Company under the terms of the contract. The petitioner merely cooked the food and then supplied for the employees of the company under the hot cases provided by it. 13. When we see the order passed, it is seen that there is no consideration regarding the nature of the contract or its terms in the assessment' order. The specific duties of the petitioner under the contract have not been discussed at all. All that has been said as ipse dixit is that the petitioner is covered under the definition of Service Tax as she has prepared and was transporting the food to their Unit from the material supplied by the company. We do not see any soundness to the logic of this finding. We are, therefore, of the clear opinion that the petitioner cannot be covered under the term 'caterer'. Once she is held not to be a caterer, she would not be liable to pay any Service Tax. 14. Learned counsel appearing on behalf of the Central Government has raised a preliminary objection regarding the tenability of the petition. He raises a question that there was a remedy of appeal available to the petitioner under the provisions of the Act and Rules, and the petitioner never exhausted that remedy, therefore, we should not entertain this writ petition at this stage. 15. This writ petition was actually filed before the Allahabad High Court in the year 2000. At that stage, the learned Judges of the Allahabad High Court had granted interim orders in favour of the petitioner. We are now in 2004. At this juncture, if we reject this writ petition on account of alternative remedy to the petitioner, it would be a mockery of our own power. Besides, there was a basic issue involved in the writ petition and that was interpretation of the term 'caterer'. We do not think that availability of the appeal or non-availability of appeal would have been or would be fatal to the petition. It is again a settled position of law that if the High Court interferes at the initial stage of the writ petition, subsequently the writ petition is not thrown on the ground of alternative remedy. 16. It is really unnecessary to quote any case law. It is again a settled position of law that if the High Court interferes at the initial stage of the writ petition, subsequently the writ petition is not thrown on the ground of alternative remedy. 16. It is really unnecessary to quote any case law. However, the authority reported in AIR 1999 SC 552 M/s Paradip Port Trust Vs. Sales Tax Officer and others, would be a guiding authority for us. 17. On this question the learned Senior Standing Counsel for the Central Government cites before us the decision in the Assistant Collector of Central Excise, Chandan Nagar Vs. Dunlop India Ltd. and others reported in 1985 I.T.R. Vol. 154 page 172. This authority is really on the powers of High Court to pass interim orders in the writ petitions under Article 226 of the Constitution of India. The Court has observed that High Court must record sufficient reasons, if alternative remedy is provided by the statute. In our opinion, the necessity of interpreting the term caterer as given in section 65 (8) of the Finance Act, 1997 was a good and sufficient reason to interfere in the writ petition. The ruling is, therefore, not applicable. 18. The learned counsel for the respondent also relied on the reported decision Thansingh Nathmal Vs. The Superintendent of Taxes Dhubri and others reported in AIR 1964 Supreme Court 1419, where the Supreme Court defines the powers of the High Court under Article 226 of the Constitution. It observed that the exercise of jurisdiction under Article 226 is discretionary and is not to be exercised because it is liable to do so and that it will be also exercised subject to self imposed limitations. 19. We have given the circumstances under which the matter has come before us. It will be futile now to dismiss the petition because in that case the petitioner would be left without any remedy because there is a limitation provided for filing the appeal and there will be no power to condone the delay under the relevant provisions of Sales Tax Act beyond maximum period of 90 days. Under these circumstances, we do not think that interference of the High Court on the basic issue would be out of place by way of writ petition. 20. The writ petition stands allowed. Rule is made absolute. Under these circumstances, we do not think that interference of the High Court on the basic issue would be out of place by way of writ petition. 20. The writ petition stands allowed. Rule is made absolute. The impugned order is quashed and set aside and it is declared that the petitioner is not caterer within the meaning of section 65(8) of the Finance Act, 1997.