2014 (8) TMI 233 - AT - Service Tax

Classification - cleaning of coaches and toilets of certain trains and supply of bed rolls to the passengers of ACs coaches - Business Support services - Commissioner held services as business auxiliary service under Section 65 (105) (zzb) readwith Section 65 (19) - Held that - There is no allegation in the show cause notice that in the alternative the Appellants services may be taxable as business auxiliary service under Section 65 (105) (zzb) readwith Section 65 (19) (vi). The Commissioner (Appeals) in the impugned order after giving a finding that the Appellants activity is not support service of business or commerce has gone on to examine the taxability of their activity as business auxiliary service under Section 65 (105) (zzb) readwith Section 65 (19) and in doing so, he has traveled beyond the scope of show cause notice which is not permissible - Following decision of CCE, Nagpur vs. Ballaspur Industries Ltd. reported in 2007 (8) TMI 10 - SUPREME COURT OF INDIA and CCE, Bangalore vs. Brindavan Beverages (P) Ltd. reported in 2007 (6) TMI 4 - SUPREME COURT OF INDIA - Decided in favour of assessee.

Summary

Issues:
1. Whether the appellant's activities of supplying food, bed rolls, and cleaning services to train passengers are subject to service tax under Section 65 (zzzq) read with Section 65 (104c) of the Finance Act, 1994.
2. Whether the Commissioner (Appeals) correctly classified the appellant's services as business auxiliary services under Section 65 (105) (zzb) read with Section 65 (19) (vi).

Analysis:

Issue 1:
The appellant was engaged in providing various services to train passengers, including supplying food, bed rolls, and cleaning services. The Department alleged that these activities constituted support services of business or commerce taxable under Section 65 (zzzq) read with Section 65 (104c) of the Finance Act, 1994. A show cause notice was issued to the appellant demanding service tax for the period from May 2007 to 31/12/2008. The Additional Commissioner confirmed the service tax demand, along with interest and penalties. The Commissioner (Appeals) upheld this decision. However, the appellant argued that their activities did not fall under the definition of support services of business or commerce. They contended that the Commissioner (Appeals) had wrongly classified their services and that they were not put on notice about the taxability under a different clause. The Tribunal observed that the show cause notice did not mention the alternative taxability as business auxiliary service under Section 65 (105) (zzb) read with Section 65 (19) (vi). The Tribunal held that the Commissioner (Appeals) had exceeded the scope of the show cause notice, which was impermissible. Citing relevant case law, the Tribunal set aside the impugned order and allowed the appeal.

Issue 2:
The Commissioner (Appeals) had classified the appellant's services as business auxiliary services under Section 65 (105) (zzb) read with Section 65 (19) (vi). The appellant argued that their services did not fall under this classification and that they were not informed about this taxability in the show cause notice. The Tribunal agreed with the appellant's argument, noting that the Commissioner (Appeals) had gone beyond the allegations in the show cause notice. The Tribunal emphasized that the scope of the notice should not be exceeded, as per relevant legal precedents. Consequently, the Tribunal found the impugned order unsustainable and set it aside, allowing the appeal filed by the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, holding that their services were not taxable under the provisions cited by the Department. The Tribunal emphasized adherence to the scope of show cause notices and set aside the impugned order issued by the Commissioner (Appeals).