Service Tax | Sale Of Popcorn & Beverages At Cinema Counters Is Not Service, No Service Tax Payable: CESTAT Delhi

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal has set aside a service tax demand of over ₹18.84 crore against assessee, holding that the sale of food and beverages such as popcorn, snacks and soft drinks at cinema counters amounts to sale of goods and does not involve any element of “service” under the Finance Act, 1994. A Bench comprising Judicial Member Binu Tamta and Technical Member P.V. Subba Rao was hearing an appeal filed by M/s Cinepolis India Private Limited against an order passed by the Additional Director General of Directorate General of GST Intelligence (DGGI), which had confirmed service tax demand, interest and penalty by treating the sale of food and drinks inside multiplexes as a “declared service” under Section 66E of the Finance Act. The CESTAT noted that the assessee operates and manages multiplex cinema halls, where food and beverages are sold over counters to movie-goers. The assessee argued that these transactions are pure sales of goods without any service element, whereas the Department claimed that a service component was involved. Agreeing with the arguments of the assessee, the Bench held that the issue is no longer res integra and is squarely covered by its earlier decision in PVR Ltd. v. CST, New Delhi 2023 (12) TMI 81-CESTAT New Delhi, where it was held that sale of ready-to-eat or packaged food at cinema counters is a transaction of sale and not provision of service. The Bench also noted that the Supreme Court of India had dismissed the Revenue's civil appeals against the PVR ruling, thereby affirming the Tribunal's view. The Bench reiterated that movie patrons stand in queues during intervals to purchase packed or reheated food items, carry them to their seats and consume them while watching the film. Such transactions do not involve serving, table service, or any other activity that could be characterised as a service. The facility of food counters within cinema premises was held to be merely incidental to the main activity of movie exhibition. In view of the above, Bench allowed Cinepolis' appeal, set aside the impugned order confirming service tax, interest and penalties, and granted consequential relief to the appellant. Case Title: M/s Cinepolis India Private Limited Vs. Additional Director General (Adjudication) Directorate General of GST Intelligence (Adjudication Cell) Case No.: Service Tax Appeal No. 50804 of 2021 Appearance for Appellant: Shri Gopal Mundhra Appearance for Respondent/Department: Shri Aejaz AhmadClick Here To Read/Download Order

Service Tax | Sale Of Popcorn & Beverages At Cinema Counters Is Not Service, No Service Tax Payable: CESTAT Delhi

Rajnandini Dutta

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