2022 (5) TMI 481 - AT - Service Tax

Non-payment of service tax - Business Auxiliary Service or not - services of supply of bedroll kits to the passengers of train on behalf of IRCTC - outdoor catering services on the sale of breakfast, meals, package foods items and beverages in the trains - period from 01.03.2006 to 31.03.2008. Supply of bed rolls under the head business auxiliary services - HELD THAT - The facts, is not disputed in the present matter that Appellant has supplied bedroll kits to passengers of Air-Conditioned class and other classes on behalf of IRCTC. As per the contract with IRCTC, the Appellant has to compulsorily provide the bedroll kit to passengers on demand. For the said services a monthly bill was raised by the appellant to IRCTC, the appellant for the said services needs not to charge the passengers. The services have been rendered by the appellant to the passengers on behalf of IRCTC. The said services rendered by Appellant for an on behalf of IRCTC to passengers in the nature of a customer care service - such services appropriately classifiable under business auxiliary services under the category of Customer care services provided on behalf of the client under Section 65(11) of the Finance Act, 1994 . Penalty u/s 76 and 78 of FA - HELD THAT - This is not the case where the issue was under litigation or there is any interpretation of law involved for the reason that all the judgments relied upon by the appellant are on different facts and accordingly the demand of extended period is sustainable - As regard penalty imposed under Section 76 and 78, simultaneous penalty under Section 76 and 78 cannot be imposed. Therefore, the penalty imposed under Section 76 is set aside. Other penalties and interests to the extent demand was sustained is also sustainable. Outdoor catering services - HELD THAT - Various facts has not been examined in the impugned order by the Ld. Adjudicating authority - the impugned order as regard the said issue is set aside and matter is remanded to the adjudicating authority to consider aforesaid aspects and pass a fresh order, after following the Principle of Natural Justice such as considering the submissions made/to be made by both the parties and granting the sufficient Personal hearing. Appeal allowed in part and part matter on remand.

Issues Involved:
1. Liability to pay service tax on supply of bedroll kits under 'business auxiliary services'.
2. Liability to pay service tax on outdoor catering services for the sale of breakfast, meals, packaged food items, and beverages in trains.

Issue-Wise Detailed Analysis:

1. Liability to pay service tax on supply of bedroll kits under 'business auxiliary services':

The Revenue contended that the supply of bedroll kits to passengers in trains by the appellant amounts to providing services to IRCTC, thus chargeable to service tax under 'business auxiliary services'. The appellant raised monthly bills to IRCTC for each bedroll kit provided, and IRCTC paid a fixed amount per kit. The dispute centered on whether this activity falls under 'customer care service provided on behalf of the client' as defined in Section 65(19) of the Finance Act, 1994.

The Tribunal noted that the appellant supplied bedroll kits to passengers on behalf of IRCTC, and these services were rendered as 'customer care service'. Therefore, the Tribunal held that such services are appropriately classifiable under 'business auxiliary services' under the category of 'Customer care services provided on behalf of the client' as per Section 65(11) of the Finance Act, 1994. The Tribunal found that the impugned order was sustainable on this issue, and the demand for the extended period was also sustainable. However, the penalty under Section 76 was set aside, while other penalties and interests were upheld.

2. Liability to pay service tax on outdoor catering services:

The adjudicating authority initially found that the appellant provided catering services on trains as per contracts with IRCTC, including selling breakfast, meals, packaged food items, and beverages. The appellant claimed the benefit of Notification No. 12/2003-ST, which exempts the value of goods and materials sold by the service provider from service tax. The adjudicating authority accepted this claim, noting that the goods were sold on trains and no Cenvat credit was taken.

The Revenue disputed this finding, arguing that the value of catering services was considered as the sale of MRP goods, amounting to a diversion of taxable value. They highlighted discrepancies in the declared and actual values of purchases and sales, and that the appellant had agreed to the differential taxable value and paid an amount of Rs. 25,47,919/-. The Revenue also contended that the adjudicating authority erred by considering Notification No. 12/2003-ST alone, without addressing the mutual exclusivity with Notification No. 1/2006-ST.

The Tribunal found that the adjudicating authority had not examined these facts. Consequently, the Tribunal set aside the impugned order on this issue and remanded the matter to the adjudicating authority for a fresh order, ensuring the principles of natural justice are followed, including considering submissions from both parties and granting sufficient personal hearings.

Conclusion:

The assessee's appeal was partly allowed, and the revenue's appeal was allowed by way of remand to the adjudicating authority. The Tribunal's decision emphasized the need for a detailed examination of the facts and adherence to natural justice principles in the adjudication process.

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