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2019 (3) TMI 1436 - AT - Service TaxClassification of services - Business Auxiliary Service or not - Supply of bedrolls to Indian Railways and IRCTC - time limitation - Held that - It is the case of the Revenue that such supply of bed rolls amount to supplying services to Indian Railways and IRCTC and the same is chargeable to service tax under the head of business auxiliary services. At the stage of adjudication and first appeal, the appellant contested their tax liability on this head. Ld. Counsel for the appellant fairly submits that this issue has now been settled against them and therefore he is not contesting the same on merits. Therefore the appellant is liable to pay service tax on the supply of bed rolls under business auxiliary services. Cleaning of toilets and compartments - cleaning services or not - Held that - The Principal Bench of Tribunal at Delhi has, in the case of R.K. Refreshments Enterprises Pvt. Ltd. and others 2018 (2) TMI 1412 - CESTAT NEW DELHI held that the railway coaches or rolling stock of the railways meant for transport and cannot be considered as a commercial or industrial building or factory or plant or machinery. Therefore, the cleaning services rendered in the railway coaches are not covered by the taxing statute - railway coaches cannot be considered as commercial premises, being the rolling stock. If it had been the intention of the Legislature to cover even cleaning of railway coaches, busses, Air crafts, Ships etc., they would have been specifically covered. A taxing statute has to be strictly interpreted and if some one gets out of tax net because of the way the taxing statute has been drafted, this cannot be the remedied through a judicial/quasi judicial order - the appellant is not liable to pay service tax on the cleaning services. Outdoor catering services - Sale of food items and beverages in train and on platforms alongside the train - demand of service tax - Held that - A similar case came up before Hon ble High Court of Allahabad in the case of Indian Coffee Workers Co-op Society Limited 2014 (4) TMI 407 - ALLAHABAD HIGH COURT in which it has been held that services rendered by the assessee in the canteen or the principals is liable to be charged as service tax as outdoor catering service. - the present case is similar to this inasmuch as the assessee herein were supplying food items either cooked by them or supplied by IRCTC kitchen to various persons in a place which is known namely the railway coaches and railway platforms. Therefore, the ratio of the judgment of Hon ble High Court of Allahabad in the case of Indian Coffee Workers Co-op Society Limited squarely applies to the present case - the appellant is liable to pay service tax on supply of food items on outdoor catering services. Extended period of limitation - Held that - The narration of facts in the show cause notice itself shows full cooperation of the assessee during investigation even though they had held a different view from the department that they are not liable to pay service tax. Under these circumstances, we find that no case, whatsoever, has been made in the show cause notice to invoke the extended period of limitation - Similarly the imposition of fine under section 78 on the same grounds in this show cause notice also does not sustain. Appeal disposed off.
Issues Involved:
1. Service tax liability on supply of bedrolls under 'Business Auxiliary Services'. 2. Service tax liability on cleaning of toilets and compartments under 'Cleaning Services'. 3. Service tax liability on sale of food and beverages under 'Outdoor Caterer's Services'. 4. Interest chargeable under Section 75 of the Finance Act, 1994. 5. Invocation of extended period of limitation for the first demand. 6. Imposition of penalty under Section 78 of the Finance Act, 1994. 7. Imposition of penalty under Section 77(1) of the Finance Act, 1994 for failure to take registration. 8. Imposition of penalty under Section 77(2) of the Finance Act, 1994 for failure to file ST-3 returns. Detailed Analysis: (a) Supply of Bedrolls under 'Business Auxiliary Services': The appellant conceded that the supply of bedrolls to passengers is chargeable to service tax under 'Business Auxiliary Services' as per Section 65(19) read with Section 65(105)(zzb) of the Finance Act, 1994. Therefore, the appellant is liable to pay service tax on the supply of bedrolls. (b) Cleaning of Toilets and Compartments: The Revenue argued that cleaning services are taxable under 'Cleaning Services' as per Section 65(24b) read with Section 65(105)(zzzd) of the Finance Act, 1994. The appellant contended that the services rendered in railway compartments do not fall under 'commercial or industrial buildings or premises'. The Tribunal referenced the case of R.K. Refreshments & Enterprises Pvt. Ltd., which held that railway coaches are rolling stock and not commercial premises. Consequently, the Tribunal concluded that cleaning services rendered in railway coaches are not taxable under 'Cleaning Services'. (c) Outdoor Catering Services: The appellant argued that the sale of food and beverages should be subject to VAT, not service tax, citing the Delhi High Court's judgment in the IRCTC case. However, the Tribunal found that the appellant's arrangement with IRCTC, where they sell food items and remit part of the proceeds to IRCTC, constitutes a service. The Tribunal referenced the Allahabad High Court's judgment in Indian Coffee Workers’ Co-op Society Limited and the Kerala High Court's judgment in Saj Flight Services Pvt. Ltd., holding that such activities are taxable under 'Outdoor Catering Services'. (d) Interest Chargeable: The Tribunal confirmed that interest is chargeable on the demands under Section 75 of the Finance Act, 1994, wherever the service tax demand is upheld. (e) Extended Period of Limitation: The Tribunal examined whether the extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994, could be invoked. The Tribunal found that the appellant had cooperated with the investigation and provided all requested information. Therefore, the allegation of wilful misstatement or suppression of facts was not substantiated, and the extended period of limitation could not be invoked. (f) Penalty under Section 78: The Tribunal found that the imposition of penalty under Section 78, based on the same grounds as the extended period of limitation, was not justified due to the lack of evidence of wilful misstatement or suppression of facts. (g) Penalty under Section 77(1): The Tribunal noted that penalties under Section 77(1) require evidence of fraud, collusion, wilful misstatement, or suppression of facts, which were not established. The appellant's cooperation during the investigation and their belief that they were not liable for service tax justified the waiver of penalties. (h) Penalty under Section 77(2): Similarly, the Tribunal found that the appellant's failure to file ST-3 returns was due to their belief that they were not liable for service tax, and thus, penalties under Section 77(2) were also waived. Conclusion: - Service tax on supply of bedrolls and sale of food and beverages is confirmed within the normal period of limitation along with applicable interest. - Service tax on cleaning services is set aside. - All penalties are set aside invoking the provisions of Section 80 of the Finance Act, 1994. - The appeals filed by the assessee and the department are disposed of accordingly. (Pronounced in open court on 26.03.2019)
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