2018 (5) TMI 1675 - AT - Service Tax

Business Auxiliary Services - contracts with the North Western Indian Railway, Jodhpur Division involving cleaning of bed rolls, towels, pillow covers and blankets - the appellant also entered into separate agreement with M/s.P.K. Shefi to work as their sub-contractor to carry out similar services - Held that - From the wording of the contract and the activities carried out by the appellant, it is seen that the same are required to be considered as a composite service and it will not be proper to vivisect the services into the various components even though the contract specified the different components and separate charges for the same. The appellant is required to carry out the above services to the customers of Railways, who are passengers travelling in the AC compartments. Since it is the responsibility of the Railways to provide the services and the appellant has provide the services on behalf of the Railways, the services are rightly classifiable under Business Auxiliary Service . The classification of the service under Business Auxiliary Service upheld - Since the appellant has not even got registered their services for payment of service tax, penalty also upheld. Appeal dismissed - decided against appellant.

Summary

Issues:
Jurisdiction of Revenue Authorities for adjudication based on geographical address of business premises; Classification of services rendered by the appellant under "Business Auxiliary Service" for service tax liability; Composite nature of services provided by the appellant under contracts with Railways and sub-contractor.

Jurisdiction Issue Analysis:
The appellant argued that the Revenue Authorities lacked jurisdiction as the activities were carried out from premises provided by Jodhpur Division of Railways, despite the appellant's office being in Ratlam. The Tribunal upheld the jurisdiction of Indore Central Excise Authorities based on the geographical address of the appellant's business premises in Ratlam, within the Indore Commissionerate's jurisdiction, dismissing the appellant's jurisdictional challenge.

Classification of Services Issue Analysis:
The services provided by the appellant, including collecting and cleaning bed rolls, blankets, and distributing them to passengers, were classified under "Business Auxiliary Service" for service tax liability. The Tribunal considered the contracts awarded to the appellant and the composite nature of services provided, concluding that the services should be treated as a whole without vivisecting them into separate components. The Tribunal upheld the classification under "Business Auxiliary Service" based on the appellant providing services on behalf of Railways to passengers in AC compartments, in line with the decision in the case of R.C. Goel. The Tribunal found no infirmity in imposing penalties due to the appellant's failure to register for service tax.

Composite Services Issue Analysis:
The Tribunal determined that the services provided by the appellant, involving collecting, cleaning, and distributing items to passengers, constituted a composite service. Despite the contracts specifying separate components and charges, the Tribunal viewed the services as a whole, emphasizing the appellant's responsibility to provide services to Railway customers. The Tribunal's decision aligned with the view that the services fell under "Business Auxiliary Service," as upheld in the case of R.C. Goel, leading to the rejection of the appellant's appeals and sustaining the impugned order for service tax liability.

This judgment highlights the importance of jurisdiction based on business premises, the classification of composite services under relevant tax categories, and the implications of failing to register for service tax, providing a comprehensive analysis of the issues involved in the legal dispute.