2022 (10) TMI 881 - HC - Service Tax

Recovery of past dues of service tax - Classification of services - Business Auxiliary Services or not - supply of bed rolls to passengers travelling in A/c III Tiers and in other higher classes and charges thereof collected by appellant from railways - Customer Care Service provided to the railways or not - HELD THAT - The reliance placed on Section 99 of the Finance Act, 2013 by the appellant in this appeal, at this stage, is of no relevance as it applies only to taxable service provided by the Indian Railways. The service provided by the appellant to the Railways cannot be construed as the service provided by the Railways. What is provided by the appellant is the service of supply of bed rolls alone for the passengers travelling in AC compartments. Therefore, the appellant cannot claim any exemption in terms of the aforesaid provisions of the Finance Act, 2013. Once the language in taxing statute is clear, there is no scope in interpreting the same as the tax provisions has to be read as it is and nothing is to be intended. Considering the fact that the appellant is in arrears of tax right from 2003 and has not paid the amount till date, the official respondents are directed to recover the amount by ensuring that the appellant's business is not stalled, by giving time for repaying the amount together with interest and penalty - Petition closed.

Issues Involved:
1. Whether the supply of bed rolls to passengers by the appellant falls under "Customer Care Service" taxable as "Business Auxiliary Service".
2. Whether the Railways can be termed as "clients" in the transaction of supply of bed rolls.
3. Applicability of Section 99 of the Finance Act, 2013 to the services provided by the appellant.
4. Whether the supply of bed rolls amounts to a "deemed sale" and is outside the purview of the Finance Act.
5. Justification of the Tribunal's decision regarding the appellant's service on behalf of the Railways.
6. Invocation of the larger period of limitation.

Detailed Analysis:

1. Whether the supply of bed rolls to passengers by the appellant falls under "Customer Care Service" taxable as "Business Auxiliary Service":
The Tribunal held that the appellant's activities of supplying bed rolls to upper-class passengers on behalf of the Railways constitute "Customer Care Service" under "Business Auxiliary Service" as defined in Section 65(19) of the Finance Act, 1994. The Tribunal emphasized that "Customer Care" involves assistance and support provided by a company to its customers, aiming to ensure their satisfaction and maintain ongoing client relationships. The Tribunal found that the appellant's service of providing bed rolls free of charge to upper-class passengers aligns with the Railways' customer care initiatives.

2. Whether the Railways can be termed as "clients" in the transaction of supply of bed rolls:
The Tribunal concluded that the Railways are indeed the "clients" of the appellant, as the appellant performs customer care services on behalf of the Railways. The Tribunal referenced the Vision and Mission Statements of the Indian Railways, which emphasize customer focus and care, thereby reinforcing that the Railways are the clients in this context.

3. Applicability of Section 99 of the Finance Act, 2013 to the services provided by the appellant:
The appellant argued that Section 99 of the Finance Act, 2013 exempts services provided by the Railways from service tax. However, the Tribunal and the High Court found that this exemption applies only to services provided by the Railways, not to services provided to the Railways. Therefore, the appellant's service of supplying bed rolls does not qualify for exemption under Section 99.

4. Whether the supply of bed rolls amounts to a "deemed sale" and is outside the purview of the Finance Act:
The appellant contended that the supply of bed rolls should be considered a "deemed sale" and thus outside the purview of the Finance Act. The Tribunal rejected this argument, stating that the service provided by the appellant falls within the definition of "service" under Section 65(b)(44) of the Finance Act, 1994, as it involves an activity carried out for consideration.

5. Justification of the Tribunal's decision regarding the appellant's service on behalf of the Railways:
The Tribunal justified its decision by stating that the appellant's service of supplying bed rolls is performed on behalf of the Railways, making it a customer care service provided on behalf of a client. The High Court upheld this view, noting that the appellant's service aligns with the Railways' customer care initiatives and falls within the ambit of "Business Auxiliary Service."

6. Invocation of the larger period of limitation:
The appellant argued that the larger period of limitation should not be invoked as they believed their activities were not subject to service tax. The Tribunal and the High Court found no merit in this argument, stating that the appellant's belief was not sufficient to avoid tax liability. Consequently, the appeals were dismissed, and the appellant was directed to pay the outstanding tax amount along with interest and penalty.

Conclusion:
The High Court dismissed all appeals, affirming the Tribunal's decision that the appellant's service of supplying bed rolls to passengers constitutes "Customer Care Service" taxable under "Business Auxiliary Service." The Court also clarified that Section 99 of the Finance Act, 2013 does not exempt the appellant's service from tax liability. The appellant was directed to pay the outstanding tax amount with interest and penalty, with instructions to the official respondents to recover the amount without stalling the appellant's business.

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