(1.) THIS Writ petition in one sense has really become redundant because the provisions, constitutionality of which is challenged in this Writ petition, are no more on the statute book. However, since those provisions created a liability for the period they were on the statute book, the petitioner, which is a representative body of the hotels is pressing the challenge. The following facts would be necessary to understand the controversy.
(2.) IT is common knowledge that while presenting the Budget in the year 1994-95, the Finance Minister proposed to introduce a tax on certain services and pursuant to the same, Chapter V of the Finance Act, 1994 introduced provisions for the levy of the tax known as the 'service tax", which was defined as the tax chargeable under the provisions of Chapter V. This tax was to apply to all the "taxable services" provided after the commencement of Chapter V. Section 66 of the Finance Act, 1994 is a charging section. Few other provisions would be necessary to be seen. Section 65(16) as it stood then defined the "taxable service" while, Sec. 67 provides for the manner in which the "taxable service" was to be valued for charging the service tax. IT also provided that every person responsible for collecting the service tax under Chapter V shall within such time and in such manner and in such form as may be prescribed make an application for registration under this Chapter to the Central Excise Officer. Section 70 provided that every person responsible for collecting the service tax shall furnish or cause to be furnished to the Central Excise Officer in the prescribed form and verified in the prescribed manner a quarterly return within fifteen days of the end of the preceding quarter giving various particulars required under the said provision. This Finance Act was substantially amended by Finance Act, 1997 and number of other services were brought into the tax dragnet. Section 65(8) defined the term "caterer" as follows: "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 accountrements for any purpose or occasion." Sec. 65(19) defined the term "mandap", which is as follows : "Mandap means any immovable property as defined in Section 3 of the Transfer of Property Act, 1882 (4 of 1882) and includes any furniture, light fittings and floor covering therein let out for consideration for organising any official, social or business function." Sec. 65(20) defined the term "mandap keeper". IT is as under : "Mandap-keeper means a person who allows temporary occupation of a mandap for consideration for organising any official, social or business function." Sec. 65(24) defined the term "outdoor caterer", which reads as follows : "Outdoor caterer means a caterer engaged in providing services in connection with catering at a place other than his own." Sec. 65(41)(n) and (p) defines "taxable service" as under : "Taxable service means, any service provided (n) to a client, by an outdoor caterer; (p) to client by a mandap keeper in relation to use of a mandap in any manner including the facilities provided to the client in relation to such use and also the services, if any, rendered as a caterer." Sec. 67(m) and (o) are also relevant sections and they are as under : "67(m) Valuation of taxable services for charging service tax in relation to service provided by an outdoor caterer to a client, shall be the gross amount charged by such caterer from the client for services in relation to such catering including the charges for food, edible preparations, alcoholic or nonalcoholic beverages or crockery and similar articles or accoutrements provided to such client for any purpose or on any occasion. 67(o) Valuation of taxable services in relation to service provided by man-dap keeper to a client, shall be the gross amount charged by such keeper from the client for the use of mandap including the facilities provided to the client in relation to such use and also the charges for catering, if any."
(3.) THE only argument raised is that when a caterer or as the case may be an outdoor caterer offers catering services as contemplated in the then Sec. 65(41)(n), he actually carried on the sale of the taxable articles like food or alcoholic or non-alcoholic beverages to the client and, therefore, the tax imposed on the sale price would amount to sales tax and would be coverable within Art. 366(29 A)(f) and ultimately relatable to Entry 54 of List II. Precisely this argument has been negatived by us in our judgment dated 30-4-2001 in W.P. No. 1617 of 1999, etc. [2001 (133) E.L.T. 36 (Mad.)] where we were considering the challenges to the services offered by mandap keeper and more precisely to Sec. 65(19), 65(2), 65(41)(p) and Sec. 67(1). It will be seen that a taxable service offered to the client by a mandap keeper included the service for user of the mandap and also included the services rendered as a caterer. So also, under the amended Sec. 67(1) the valuation of the service provided by the mandap keeper was defined as the gross amount charged by the mandap keeper from the client for the user of the mandap and also the charges for catering. THE argument before us in that batch of writ petition was that even in providing the services to the client by a mandap keeper, the mandap keeper was effecting the sale of food articles. An identical argument was addressed before us on the aspect of the legislative competence with reference to Art. 366(29A)(f) and also Entry 54. In paragraphs 28, 29, 30, 31, 32, 33, 34, 35, 36, and 37 we have dealt with this aspect and held that the said tax was more particularly relatable to the aspect of services offered by the mandap keeper and not a mere sale of goods. In coming to that conclusion we have relied upon the celebrated decision of the Apex Court in Federation of Hotels and Restaurants v. Union of India (AIR 1990 SC 1637) and found that while dealing with the identical question regarding the "expenditure tax", the Supreme Court had held that the tax levied could not be said to be relatable to sale of goods but was relatable to expenditure alone. While addressing the history of the constitutional amendment which introduced Art. 366(29A)(f), we have also considered the earlier decided cases reported in 1972 STC 113 and AIR 1978 SC 1591. We have also rejected the contention raised in that case that the decision of the Apex Court in Federation of Hotels and Restaurants case, cited supra, was without consideration of Art. 366(29A)(f) and, therefore, was not binding on us. We have also given reason as to why no reference was made in that decision to Art. 366(29A)(f). THE reason being the Apex Court in that case had found a distinct aspect of the expenditure though there was involvement of the sale of food stuffs in that case. We have said in paragraph 32 as follows : "32. We feel that the aspect of service is extremely important and can be viewed as a "distinct and independent aspect" from the very language of Sec. 65(48)(m). That provision spells out the "taxable service" and, therefore, can legitimately be read as fixing the tax liability along with Sec. 66. Under Sec. 65(48)(m) what is taxed is taxable service to a client by a "mandap keeper" in relation to use of a 'mandap' in any manner and includes the facilities provided to the clients in relation to such use. THE last words are extremely important and they are : "and also the services, if any, rendered as a caterer." What is, therefore, to be taxed is the 'service" given by the "mandap keeper", which would mean the "user of the mandap" and the "facilities provided therein", which "facilities" would be in relation to the "user" and also the services rendered by the "mandap keeper" as a "caterer." THErefore, the last words of the provision clearly bring out a position that it is the service provided by the "mandap keeper" as a "caterer" which is taxable and not the supply made by him of food, drink, etc." In the same manner we can say that it is only the aspect of service in providing food stuffs at a place desired by the client which essentially would not be the place of the caterer would be the distinct and separate aspect in respect of the service provided by the outdoor caterer- We have also taken therein the stock of the argument that the charges for catering were included in the valuation of the taxable services in case of the services provided by the mandap keeper to the client. Sec. 67(m) as it stood then in the unamended Act was almost in the identical terms which we may quote even at the cost of repetition : "67(m) Valuation of taxable services for charging service tax in relation to service provided by an outdoor caterer to a client, shall be the gross amount charged by such caterer from the client for services in relation to such catering including the charges for food, edible preparations, alcoholic or nonalcoholic beverages or crockery and similar articles or accoutrements provided to such client for any purpose or on any occasion." THE language with Sec. 65 as it stood then, which is the impugned provision now and Sec. 65(1) (post amendment) which we have considered in W.P. No. 1617 of 1999 and batch of writ petitions is strikingly similar. We have also taken the stock of the earlier decided cases as also the later judgments of the Supreme Court reported in 2001 (1) SCC 521. We have no doubt that the judgment of ours in W.P. No. 1617 of 1991, etc. would clinch the issue in the present case also. We are, therefore, of the clear opinion that the present impugned provisions cannot be attributed to Entry 54 of List II (State List) and, therefore, it cannot be said that there is lack of legislative competence in respect of the impugned provisions.