2017 (9) TMI 231 - AT - Service Tax

Business Support Services - cleaning of coaches/toilets of trains as well as supply of bed rolls to passengers - Held that - the supply of bed rolls as well as cleaning of coaches and toilets of trains are not covered within the meaning of support services of business or commerce. The services have been rendered by the appellant to the passengers on behalf of IRCTC/Indian railways - such services are more 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 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Levy of service tax on cleaning of coaches/toilets of trains and supply of bed rolls to passengers under the category of business support services.

Analysis:
The dispute in this case revolves around the imposition of service tax on the activities of cleaning coaches/toilets and supplying bed rolls to passengers. The appellant, engaged in these services, argued that these activities should not be classified as taxable services under the category of business support services. They contended that the specific description under section 65A should be preferred, and their services do not fall under business support services. The appellant further claimed that they were not providing support services related to managing distribution, logistics, or maintaining infrastructural support for IRCTC. They suggested that if their activities were to be taxed, it should be under the category of "supply of tangible goods" as they were supplying bed rolls.

The Department, however, supported the imposition of service tax on the appellant's activities, stating that supplying bed rolls and cleaning coaches could be categorized under operational or administrative assistance and infrastructure support services, falling under business support services. The Department argued that the impugned orders should be upheld.

After hearing both sides and examining the appeal record, the tribunal found that the supply of bed rolls and cleaning of coaches/toilets did not meet the criteria for being classified as support services of business or commerce. The tribunal determined that the services provided by the appellant were more appropriately classified under business auxiliary services, specifically as "Customer care services provided on behalf of the client." Therefore, the tribunal concluded that the demand for service tax under the category of business support services was not justified. As a result, the impugned orders were set aside, and the appeals were allowed.

In conclusion, the tribunal ruled in favor of the appellant, setting aside the demand for service tax on the cleaning of coaches/toilets and the supply of bed rolls to passengers under the category of business support services.