Service Tax on Home Delivery of Food not applicable

As per Govt norms, Service Tax is levied if the Food is served in an Air Conditioned Restaurant.

However, there has been a lot of confusion regarding levy of Service Tax on Home Delivery of Food as such food is not being eaten in a AC Restaurant.

A clarification in this regard was sought from the office of the Deputy Commissioner of Central Excise and Service Tax Division (Chandigarh) in this regard.

It has in a written communication replied that in the case of Transaction involving Pick-up/ Home Delivery of food sold by a Restaurant, the dominant nature of the transaction is that of Sale and not service as the Food is not served at the Restaurant.

Moreover, no element of service is being offered at the Restaurant, be it ambience, live entertainment, air conditioning, personal hospitality etc. The Service Tax can only be levied if there is an element of "Service" involved which would typically be the case where the food is served in a Restaurant.

Therefore, the above transaction is not chargeable to Service Tax, being sale in nature, only if, no amount is charged for such free delivery of food.

- CA Kasliwal Ambar