The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Principal Bench in New Delhi has set aside a service tax demand of ₹15.94 lakh against Bhilwara-based Kudal Caterers & Halwai, ruling that catering services provided to educational institutions were exempt under tax notifications.
The bench, comprising Dr. Rachna Gupta (Judicial) and Ms. Hemambika R. Priya (Technical), agreed, noting that both the original notification and subsequent amendments specifically covered catering services to educational institutions. The tribunal also referred to CBEC’s 2013 clarification and cited similar precedents, including CCE & ST v. M.J. Solanki and Mody Education Foundation v. CCE Jodhpur, to support its decision.
The dispute arose after the Central Excise and GST Commissionerate, Udaipur, acting on third-party ITR data, alleged that the appellant failed to pay service tax of ₹26.57 lakh for services rendered between 2012-13 and 2014-15 under the category of “Outdoor Catering Services.” Following adjudication, the demand was reduced to ₹15.94 lakh after granting cum-tax benefit, but interest and penalties under Sections 77 and 78 of the Finance Act, 1994, were upheld.
The caterer had a contract with Noble Educational Society, which runs Noble International School and its hostel, to prepare and serve daily meals, including special diets, milk, and fruits for students and faculty. The society certified that the mess facility was part of its educational operations and had been outsourced to the appellant. The appellant argued that such services fell under auxiliary educational services as defined in Notification No. 25/2012-ST, making them exempt from service tax.
On the department’s contention that the exemption applied only from July 11, 2014, the tribunal found the interpretation factually and legally flawed, observing that the show cause notice itself demanded tax beyond that date.
The tribunal further ruled that the extended limitation period was wrongly invoked, holding that there was no willful suppression since the services were exempt. As a result, the entire demand was quashed, and the penalties annulled.
“This order reinforces the legal position that catering services to educational institutions are squarely covered under service tax exemptions,” said the tribunal.
Case Details
Case Title: M/s. Smt. Kala Kudal Versus The Commissioner, Central Excise & GST, Udaipur (Rajasthan)
Case No.: Service Tax Appeal No. 51606 Of 2019
Date: 12.08.2025
Counsel For Appellant: Vivek Sharma and Ms. Saumya Mehrotra
Counsel For Respondent: Anand Narayan
Read More: Supreme Court Quashes NCLAT Order Over Time-Barred Insolvency Appeal Without Certified Copy
Mariya is the Senior Editor at Juris Hour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
